Correlation Between APPLIED MATERIALS and Autohome
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and Autohome 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 APPLIED MATERIALS and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Autohome ADR, you can compare the effects of market volatilities on APPLIED MATERIALS and Autohome 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 APPLIED MATERIALS with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Autohome.
Diversification Opportunities for APPLIED MATERIALS and Autohome
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between APPLIED and Autohome is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and APPLIED MATERIALS 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 APPLIED MATERIALS are associated (or correlated) with Autohome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome ADR has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Autohome go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Autohome
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.28 times more return on investment than Autohome. However, APPLIED MATERIALS is 1.28 times more volatile than Autohome ADR. It trades about -0.02 of its potential returns per unit of risk. Autohome ADR is currently generating about -0.06 per unit of risk. If you would invest 16,888 in APPLIED MATERIALS on September 2, 2024 and sell it today you would lose (356.00) from holding APPLIED MATERIALS or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. Autohome ADR
Performance |
| Timeline |
| APPLIED MATERIALS |
| Autohome ADR |
APPLIED MATERIALS and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Autohome
The main advantage of trading using opposite APPLIED MATERIALS and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, Autohome 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 Autohome will offset losses from the drop in Autohome's long position.| APPLIED MATERIALS vs. SBM OFFSHORE | APPLIED MATERIALS vs. Wizz Air Holdings | APPLIED MATERIALS vs. Selective Insurance Group | APPLIED MATERIALS vs. Japan Post Insurance |
| Autohome vs. Alphabet Class A | Autohome vs. Tencent Holdings | Autohome vs. Prosus NV | Autohome vs. AIRBNB INC DL 01 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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