Correlation Between Autohome and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Autohome and Morgan Stanley 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 Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome and Morgan Stanley, you can compare the effects of market volatilities on Autohome and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Morgan Stanley.
Diversification Opportunities for Autohome and Morgan Stanley
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Autohome and Morgan is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley has no effect on the direction of Autohome i.e., Autohome and Morgan Stanley go up and down completely randomly.
Pair Corralation between Autohome and Morgan Stanley
Assuming the 90 days trading horizon Autohome is expected to generate 3.05 times less return on investment than Morgan Stanley. In addition to that, Autohome is 1.15 times more volatile than Morgan Stanley. It trades about 0.05 of its total potential returns per unit of risk. Morgan Stanley is currently generating about 0.18 per unit of volatility. If you would invest 10,045 in Morgan Stanley on September 1, 2024 and sell it today you would earn a total of 5,655 from holding Morgan Stanley or generate 56.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Autohome vs. Morgan Stanley
Performance |
| Timeline |
| Autohome |
| Morgan Stanley |
Autohome and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Morgan Stanley
The main advantage of trading using opposite Autohome and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.The idea behind Autohome and Morgan Stanley 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.| Morgan Stanley vs. Zoom Video Communications | Morgan Stanley vs. Iron Mountain Incorporated | Morgan Stanley vs. Broadcom | Morgan Stanley vs. Mangels Industrial SA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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