Correlation Between Autohome and Urban Outfitters
Can any of the company-specific risk be diversified away by investing in both Autohome and Urban Outfitters at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Autohome and Urban Outfitters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and Urban Outfitters, you can compare the effects of market volatilities on Autohome and Urban Outfitters and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Autohome with a short position of Urban Outfitters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Urban Outfitters.
Diversification Opportunities for Autohome and Urban Outfitters
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Autohome and Urban is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and Urban Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Outfitters and Autohome is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Autohome ADR are associated (or correlated) with Urban Outfitters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Outfitters has no effect on the direction of Autohome i.e., Autohome and Urban Outfitters go up and down completely randomly.
Pair Corralation between Autohome and Urban Outfitters
Assuming the 90 days trading horizon Autohome ADR is expected to generate 2.14 times more return on investment than Urban Outfitters. However, Autohome is 2.14 times more volatile than Urban Outfitters. It trades about 0.17 of its potential returns per unit of risk. Urban Outfitters is currently generating about 0.06 per unit of risk. If you would invest 2,378 in Autohome ADR on October 24, 2024 and sell it today you would earn a total of 282.00 from holding Autohome ADR or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome ADR vs. Urban Outfitters
Performance |
| Timeline |
| Autohome ADR |
| Urban Outfitters |
Autohome and Urban Outfitters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Urban Outfitters
The main advantage of trading using opposite Autohome and Urban Outfitters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Urban Outfitters can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Urban Outfitters will offset losses from the drop in Urban Outfitters' long position.| Autohome vs. Chiba Bank | Autohome vs. United Insurance Holdings | Autohome vs. PNC Financial Services | Autohome vs. Discover Financial Services |
| Urban Outfitters vs. Autohome ADR | Urban Outfitters vs. Transport International Holdings | Urban Outfitters vs. Taylor Morrison Home | Urban Outfitters vs. bet at home AG |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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