Correlation Between AIR PRODCHEMICALS and Autohome ADR
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and Autohome ADR 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 AIR PRODCHEMICALS and Autohome ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Autohome ADR, you can compare the effects of market volatilities on AIR PRODCHEMICALS and Autohome ADR 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 AIR PRODCHEMICALS with a short position of Autohome ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Autohome ADR.
Diversification Opportunities for AIR PRODCHEMICALS and Autohome ADR
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AIR and Autohome is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS are associated (or correlated) with Autohome ADR. 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 AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Autohome ADR go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Autohome ADR
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 1.25 times less return on investment than Autohome ADR. But when comparing it to its historical volatility, AIR PRODCHEMICALS is 3.42 times less risky than Autohome ADR. It trades about 0.52 of its potential returns per unit of risk. Autohome ADR is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,360 in Autohome ADR on November 2, 2024 and sell it today you would earn a total of 360.00 from holding Autohome ADR or generate 15.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Autohome ADR
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Autohome ADR |
AIR PRODCHEMICALS and Autohome ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Autohome ADR
The main advantage of trading using opposite AIR PRODCHEMICALS and Autohome ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, Autohome ADR 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 ADR will offset losses from the drop in Autohome ADR's long position.| AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc |
| Autohome ADR vs. CITY OFFICE REIT | Autohome ADR vs. SHIP HEALTHCARE HLDGINC | Autohome ADR vs. EPSILON HEALTHCARE LTD | Autohome ADR vs. US Physical Therapy |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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