Correlation Between Autohome and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Autohome and Vulcan Materials 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 Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and Vulcan Materials, you can compare the effects of market volatilities on Autohome and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Vulcan Materials.
Diversification Opportunities for Autohome and Vulcan Materials
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Autohome and Vulcan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Autohome i.e., Autohome and Vulcan Materials go up and down completely randomly.
Pair Corralation between Autohome and Vulcan Materials
Assuming the 90 days trading horizon Autohome ADR is expected to under-perform the Vulcan Materials. But the stock apears to be less risky and, when comparing its historical volatility, Autohome ADR is 1.27 times less risky than Vulcan Materials. The stock trades about -0.01 of its potential returns per unit of risk. The Vulcan Materials is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 23,756 in Vulcan Materials on August 28, 2024 and sell it today you would earn a total of 3,244 from holding Vulcan Materials or generate 13.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome ADR vs. Vulcan Materials
Performance |
| Timeline |
| Autohome ADR |
| Vulcan Materials |
Autohome and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Vulcan Materials
The main advantage of trading using opposite Autohome and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.| Autohome vs. DeVry Education Group | Autohome vs. Vulcan Materials | Autohome vs. CHINA EDUCATION GROUP | Autohome vs. STRAYER EDUCATION |
| Vulcan Materials vs. Superior Plus Corp | Vulcan Materials vs. NMI Holdings | Vulcan Materials vs. Origin Agritech | Vulcan Materials vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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