Correlation Between Autohome and Palantir Technologies
Can any of the company-specific risk be diversified away by investing in both Autohome and Palantir Technologies 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 Palantir Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome and Palantir Technologies, you can compare the effects of market volatilities on Autohome and Palantir Technologies 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 Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Palantir Technologies.
Diversification Opportunities for Autohome and Palantir Technologies
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Autohome and Palantir is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and Palantir Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies 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 Palantir Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palantir Technologies has no effect on the direction of Autohome i.e., Autohome and Palantir Technologies go up and down completely randomly.
Pair Corralation between Autohome and Palantir Technologies
Assuming the 90 days trading horizon Autohome is expected to under-perform the Palantir Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Autohome is 3.9 times less risky than Palantir Technologies. The stock trades about -0.19 of its potential returns per unit of risk. The Palantir Technologies is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 8,594 in Palantir Technologies on August 28, 2024 and sell it today you would earn a total of 4,131 from holding Palantir Technologies or generate 48.07% 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. Palantir Technologies
Performance |
| Timeline |
| Autohome |
| Palantir Technologies |
Autohome and Palantir Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Palantir Technologies
The main advantage of trading using opposite Autohome and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Palantir Technologies 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 Palantir Technologies will offset losses from the drop in Palantir Technologies' long position.The idea behind Autohome and Palantir Technologies 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.| Palantir Technologies vs. Brpr Corporate Offices | Palantir Technologies vs. Tyson Foods | Palantir Technologies vs. Autohome | Palantir Technologies vs. Zoom Video Communications |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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