Correlation Between Autohome and Baumer SA
Can any of the company-specific risk be diversified away by investing in both Autohome and Baumer SA 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 Baumer SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome and Baumer SA, you can compare the effects of market volatilities on Autohome and Baumer SA 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 Baumer SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Baumer SA.
Diversification Opportunities for Autohome and Baumer SA
Poor diversification
The 3 months correlation between Autohome and Baumer is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and Baumer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baumer SA 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 Baumer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baumer SA has no effect on the direction of Autohome i.e., Autohome and Baumer SA go up and down completely randomly.
Pair Corralation between Autohome and Baumer SA
Assuming the 90 days trading horizon Autohome is expected to generate 1.93 times more return on investment than Baumer SA. However, Autohome is 1.93 times more volatile than Baumer SA. It trades about -0.01 of its potential returns per unit of risk. Baumer SA is currently generating about -0.2 per unit of risk. If you would invest 1,646 in Autohome on September 2, 2024 and sell it today you would lose (9.00) from holding Autohome or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome vs. Baumer SA
Performance |
| Timeline |
| Autohome |
| Baumer SA |
Autohome and Baumer SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Baumer SA
The main advantage of trading using opposite Autohome and Baumer SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Baumer SA 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 Baumer SA will offset losses from the drop in Baumer SA's long position.The idea behind Autohome and Baumer SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Baumer SA vs. Autohome | Baumer SA vs. Telecomunicaes Brasileiras SA | Baumer SA vs. Unifique Telecomunicaes SA | Baumer SA vs. salesforce inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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