Correlation Between Spirent Communications and Autohome ADR
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Autohome ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Autohome ADR, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Autohome ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Autohome ADR.
Diversification Opportunities for Spirent Communications and Autohome ADR
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirent and Autohome is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Autohome ADR go up and down completely randomly.
Pair Corralation between Spirent Communications and Autohome ADR
Assuming the 90 days horizon Spirent Communications plc is expected to generate 0.5 times more return on investment than Autohome ADR. However, Spirent Communications plc is 2.01 times less risky than Autohome ADR. It trades about 0.05 of its potential returns per unit of risk. Autohome ADR is currently generating about -0.09 per unit of risk. If you would invest 204.00 in Spirent Communications plc on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Spirent Communications plc or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Autohome ADR
Performance |
| Timeline |
| Spirent Communications |
| Autohome ADR |
Spirent Communications and Autohome ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Autohome ADR
The main advantage of trading using opposite Spirent Communications and Autohome ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. Verizon Communications | Spirent Communications vs. ATT Inc | Spirent Communications vs. ATT Inc | Spirent Communications vs. Deutsche Telekom AG |
| Autohome ADR vs. SCIENCE IN SPORT | Autohome ADR vs. Air Transport Services | Autohome ADR vs. AVITA Medical | Autohome ADR vs. Fukuyama Transporting Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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