Correlation Between IMPERIAL TOBACCO and Autohome
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Autohome ADR, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Autohome.
Diversification Opportunities for IMPERIAL TOBACCO and Autohome
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IMPERIAL and Autohome is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Autohome go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Autohome
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to under-perform the Autohome. But the stock apears to be less risky and, when comparing its historical volatility, IMPERIAL TOBACCO is 5.0 times less risky than Autohome. The stock trades about -0.06 of its potential returns per unit of risk. The Autohome ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,378 in Autohome ADR on October 22, 2024 and sell it today you would earn a total of 22.00 from holding Autohome ADR or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Autohome ADR
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Autohome ADR |
IMPERIAL TOBACCO and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Autohome
The main advantage of trading using opposite IMPERIAL TOBACCO and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO 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.| IMPERIAL TOBACCO vs. Corporate Travel Management | IMPERIAL TOBACCO vs. Sims Metal Management | IMPERIAL TOBACCO vs. SUN LIFE FINANCIAL | IMPERIAL TOBACCO vs. United Insurance Holdings |
| Autohome vs. EIDESVIK OFFSHORE NK | Autohome vs. Hisense Home Appliances | Autohome vs. OFFICE DEPOT | Autohome vs. BW OFFSHORE LTD |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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