Correlation Between Autohome and T Mobile
Can any of the company-specific risk be diversified away by investing in both Autohome and T Mobile 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 T Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome and T Mobile, you can compare the effects of market volatilities on Autohome and T Mobile 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 T Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and T Mobile.
Diversification Opportunities for Autohome and T Mobile
Weak diversification
The 3 months correlation between Autohome and T1MU34 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 T Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of Autohome i.e., Autohome and T Mobile go up and down completely randomly.
Pair Corralation between Autohome and T Mobile
Assuming the 90 days trading horizon Autohome is expected to generate 6.32 times less return on investment than T Mobile. But when comparing it to its historical volatility, Autohome is 1.29 times less risky than T Mobile. It trades about 0.06 of its potential returns per unit of risk. T Mobile is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 64,888 in T Mobile on November 28, 2024 and sell it today you would earn a total of 12,359 from holding T Mobile or generate 19.05% 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. T Mobile
Performance |
| Timeline |
| Autohome |
| T Mobile |
Autohome and T Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and T Mobile
The main advantage of trading using opposite Autohome and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, T Mobile 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 T Mobile will offset losses from the drop in T Mobile's long position.| Autohome vs. Spotify Technology SA | Autohome vs. Cognizant Technology Solutions | Autohome vs. Clover Health Investments, | Autohome vs. Charter Communications |
| T Mobile vs. Martin Marietta Materials, | T Mobile vs. Molson Coors Beverage | T Mobile vs. Globus Medical, | T Mobile vs. Ares Management |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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