Correlation Between Autohome and Tencent Music
Can any of the company-specific risk be diversified away by investing in both Autohome and Tencent Music 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 Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome and Tencent Music Entertainment, you can compare the effects of market volatilities on Autohome and Tencent Music 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 Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Tencent Music.
Diversification Opportunities for Autohome and Tencent Music
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Autohome and Tencent is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and Tencent Music Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Music Entert 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 Tencent Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Music Entert has no effect on the direction of Autohome i.e., Autohome and Tencent Music go up and down completely randomly.
Pair Corralation between Autohome and Tencent Music
Given the investment horizon of 90 days Autohome is expected to under-perform the Tencent Music. But the stock apears to be less risky and, when comparing its historical volatility, Autohome is 1.13 times less risky than Tencent Music. The stock trades about -0.14 of its potential returns per unit of risk. The Tencent Music Entertainment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,184 in Tencent Music Entertainment on August 27, 2024 and sell it today you would lose (31.00) from holding Tencent Music Entertainment or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome vs. Tencent Music Entertainment
Performance |
| Timeline |
| Autohome |
| Tencent Music Entert |
Autohome and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Tencent Music
The main advantage of trading using opposite Autohome and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Tencent Music 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 Tencent Music will offset losses from the drop in Tencent Music's long position.| Autohome vs. Hello Group | Autohome vs. Weibo Corp | Autohome vs. Tencent Music Entertainment | Autohome vs. DouYu International Holdings |
| Tencent Music vs. Trivago NV | Tencent Music vs. Cheetah Mobile | Tencent Music vs. Comscore | Tencent Music vs. Arena Group Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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