Correlation Between Autohome and Atlassian Plc
Can any of the company-specific risk be diversified away by investing in both Autohome and Atlassian Plc 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 Atlassian Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome and Atlassian Plc, you can compare the effects of market volatilities on Autohome and Atlassian Plc 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 Atlassian Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Atlassian Plc.
Diversification Opportunities for Autohome and Atlassian Plc
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Autohome and Atlassian is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and Atlassian Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlassian Plc 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 Atlassian Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlassian Plc has no effect on the direction of Autohome i.e., Autohome and Atlassian Plc go up and down completely randomly.
Pair Corralation between Autohome and Atlassian Plc
Assuming the 90 days trading horizon Autohome is expected to generate 2.07 times less return on investment than Atlassian Plc. But when comparing it to its historical volatility, Autohome is 1.18 times less risky than Atlassian Plc. It trades about 0.04 of its potential returns per unit of risk. Atlassian Plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,561 in Atlassian Plc on September 2, 2024 and sell it today you would earn a total of 3,118 from holding Atlassian Plc or generate 68.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.3% |
| Values | Daily Returns |
Autohome vs. Atlassian Plc
Performance |
| Timeline |
| Autohome |
| Atlassian Plc |
Autohome and Atlassian Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Atlassian Plc
The main advantage of trading using opposite Autohome and Atlassian Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Atlassian Plc 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 Atlassian Plc will offset losses from the drop in Atlassian Plc's long position.The idea behind Autohome and Atlassian Plc 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.| Atlassian Plc vs. Beyond Meat | Atlassian Plc vs. Paycom Software | Atlassian Plc vs. Micron Technology | Atlassian Plc vs. G2D 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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