Correlation Between Banco Bradesco and Autohome
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco 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 Banco Bradesco and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bradesco SA and Autohome, you can compare the effects of market volatilities on Banco Bradesco 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 Banco Bradesco with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Autohome.
Diversification Opportunities for Banco Bradesco and Autohome
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Banco and Autohome is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and Banco Bradesco 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 Banco Bradesco SA 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 has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Autohome go up and down completely randomly.
Pair Corralation between Banco Bradesco and Autohome
Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the Autohome. But the stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 1.34 times less risky than Autohome. The stock trades about -0.51 of its potential returns per unit of risk. The Autohome is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,632 in Autohome on September 5, 2024 and sell it today you would earn a total of 94.00 from holding Autohome or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Banco Bradesco SA vs. Autohome
Performance |
| Timeline |
| Banco Bradesco SA |
| Autohome |
Banco Bradesco and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Autohome
The main advantage of trading using opposite Banco Bradesco and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco 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.| Banco Bradesco vs. Autohome | Banco Bradesco vs. Ameriprise Financial | Banco Bradesco vs. United Rentals | Banco Bradesco vs. Palantir Technologies |
| Autohome vs. Marvell Technology | Autohome vs. Electronic Arts | Autohome vs. Unity Software | Autohome vs. Charter Communications |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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