Correlation Between Autohome and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Autohome and Automatic Data 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 Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome and Automatic Data Processing, you can compare the effects of market volatilities on Autohome and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Automatic Data.
Diversification Opportunities for Autohome and Automatic Data
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Autohome and Automatic is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Autohome i.e., Autohome and Automatic Data go up and down completely randomly.
Pair Corralation between Autohome and Automatic Data
Assuming the 90 days trading horizon Autohome is expected to generate 1.83 times more return on investment than Automatic Data. However, Autohome is 1.83 times more volatile than Automatic Data Processing. It trades about 0.03 of its potential returns per unit of risk. Automatic Data Processing is currently generating about -0.05 per unit of risk. If you would invest 1,605 in Autohome on November 4, 2024 and sell it today you would earn a total of 12.00 from holding Autohome or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome vs. Automatic Data Processing
Performance |
| Timeline |
| Autohome |
| Automatic Data Processing |
Autohome and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Automatic Data
The main advantage of trading using opposite Autohome and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| Autohome vs. Cognizant Technology Solutions | Autohome vs. Take Two Interactive Software | Autohome vs. Delta Air Lines | Autohome vs. Westinghouse Air Brake |
| Automatic Data vs. Verizon Communications | Automatic Data vs. Clover Health Investments, | Automatic Data vs. Fidelity National Information | Automatic Data vs. Microchip Technology Incorporated |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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