Correlation Between Moodys and Autohome
Can any of the company-specific risk be diversified away by investing in both Moodys 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 Moodys and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moodys and Autohome, you can compare the effects of market volatilities on Moodys 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 Moodys with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moodys and Autohome.
Diversification Opportunities for Moodys and Autohome
Good diversification
The 3 months correlation between Moodys and Autohome is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Moodys and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and Moodys 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 Moodys 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 Moodys i.e., Moodys and Autohome go up and down completely randomly.
Pair Corralation between Moodys and Autohome
Assuming the 90 days trading horizon Moodys is expected to generate 0.85 times more return on investment than Autohome. However, Moodys is 1.18 times less risky than Autohome. It trades about 0.27 of its potential returns per unit of risk. Autohome is currently generating about 0.18 per unit of risk. If you would invest 68,640 in Moodys on September 12, 2024 and sell it today you would earn a total of 6,217 from holding Moodys or generate 9.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moodys vs. Autohome
Performance |
| Timeline |
| Moodys |
| Autohome |
Moodys and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moodys and Autohome
The main advantage of trading using opposite Moodys and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moodys 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.The idea behind Moodys and Autohome pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Autohome vs. Capital One Financial | Autohome vs. Beyond Meat | Autohome vs. G2D Investments | Autohome vs. Bread Financial 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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