Correlation Between Autohome and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Autohome and Micron Technology 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 Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome and Micron Technology, you can compare the effects of market volatilities on Autohome and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Micron Technology.
Diversification Opportunities for Autohome and Micron Technology
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Autohome and Micron is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Autohome i.e., Autohome and Micron Technology go up and down completely randomly.
Pair Corralation between Autohome and Micron Technology
Assuming the 90 days trading horizon Autohome is expected to generate 0.61 times more return on investment than Micron Technology. However, Autohome is 1.64 times less risky than Micron Technology. It trades about 0.09 of its potential returns per unit of risk. Micron Technology is currently generating about 0.05 per unit of risk. If you would invest 1,401 in Autohome on November 2, 2024 and sell it today you would earn a total of 313.00 from holding Autohome or generate 22.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome vs. Micron Technology
Performance |
| Timeline |
| Autohome |
| Micron Technology |
Autohome and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Micron Technology
The main advantage of trading using opposite Autohome and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| Autohome vs. Warner Music Group | Autohome vs. Take Two Interactive Software | Autohome vs. Marfrig Global Foods | Autohome vs. Liberty Broadband |
| Micron Technology vs. SVB Financial Group | Micron Technology vs. Deutsche Bank Aktiengesellschaft | Micron Technology vs. Ameriprise Financial | Micron Technology vs. Lloyds Banking Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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