Correlation Between Autohome and Alphabet
Can any of the company-specific risk be diversified away by investing in both Autohome and Alphabet 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 Alphabet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome and Alphabet, you can compare the effects of market volatilities on Autohome and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Alphabet.
Diversification Opportunities for Autohome and Alphabet
Average diversification
The 3 months correlation between Autohome and Alphabet is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and Alphabet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of Autohome i.e., Autohome and Alphabet go up and down completely randomly.
Pair Corralation between Autohome and Alphabet
Assuming the 90 days trading horizon Autohome is expected to under-perform the Alphabet. But the stock apears to be less risky and, when comparing its historical volatility, Autohome is 1.34 times less risky than Alphabet. The stock trades about -0.06 of its potential returns per unit of risk. The Alphabet is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,891 in Alphabet on August 26, 2024 and sell it today you would earn a total of 108.00 from holding Alphabet or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome vs. Alphabet
Performance |
| Timeline |
| Autohome |
| Alphabet |
Autohome and Alphabet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Alphabet
The main advantage of trading using opposite Autohome and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.| Autohome vs. Alphabet | Autohome vs. Alphabet | Autohome vs. Meta Platforms | Autohome vs. Spotify Technology SA |
| Alphabet vs. Paycom Software | Alphabet vs. Technos SA | Alphabet vs. BIONTECH SE DRN | Alphabet vs. GP Investments |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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