Correlation Between LANDSEA HOMES and Autohome ADR
Can any of the company-specific risk be diversified away by investing in both LANDSEA HOMES and Autohome ADR 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 LANDSEA HOMES and Autohome ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LANDSEA HOMES P and Autohome ADR, you can compare the effects of market volatilities on LANDSEA HOMES and Autohome ADR 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 LANDSEA HOMES with a short position of Autohome ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of LANDSEA HOMES and Autohome ADR.
Diversification Opportunities for LANDSEA HOMES and Autohome ADR
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LANDSEA and Autohome is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding LANDSEA HOMES P and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and LANDSEA HOMES 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 LANDSEA HOMES P are associated (or correlated) with Autohome ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome ADR has no effect on the direction of LANDSEA HOMES i.e., LANDSEA HOMES and Autohome ADR go up and down completely randomly.
Pair Corralation between LANDSEA HOMES and Autohome ADR
Assuming the 90 days horizon LANDSEA HOMES P is expected to under-perform the Autohome ADR. In addition to that, LANDSEA HOMES is 1.66 times more volatile than Autohome ADR. It trades about -0.31 of its total potential returns per unit of risk. Autohome ADR is currently generating about -0.1 per unit of volatility. If you would invest 2,600 in Autohome ADR on September 25, 2024 and sell it today you would lose (100.00) from holding Autohome ADR or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LANDSEA HOMES P vs. Autohome ADR
Performance |
| Timeline |
| LANDSEA HOMES P |
| Autohome ADR |
LANDSEA HOMES and Autohome ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LANDSEA HOMES and Autohome ADR
The main advantage of trading using opposite LANDSEA HOMES and Autohome ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LANDSEA HOMES position performs unexpectedly, Autohome ADR 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 Autohome ADR will offset losses from the drop in Autohome ADR's long position.| LANDSEA HOMES vs. Deutsche Wohnen SE | LANDSEA HOMES vs. Gateway Real Estate | LANDSEA HOMES vs. TIMES CHINA HLDGS | LANDSEA HOMES vs. Greenland Hong Kong |
| Autohome ADR vs. Alphabet Class A | Autohome ADR vs. Alphabet | Autohome ADR vs. Meta Platforms | Autohome ADR vs. Tencent Holdings Ltd |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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