Correlation Between NXP Semiconductors and Autohome
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors 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 NXP Semiconductors and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NXP Semiconductors NV and Autohome, you can compare the effects of market volatilities on NXP Semiconductors 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 NXP Semiconductors with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and Autohome.
Diversification Opportunities for NXP Semiconductors and Autohome
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NXP and Autohome is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and NXP Semiconductors 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 NXP Semiconductors NV 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 NXP Semiconductors i.e., NXP Semiconductors and Autohome go up and down completely randomly.
Pair Corralation between NXP Semiconductors and Autohome
Assuming the 90 days trading horizon NXP Semiconductors NV is expected to under-perform the Autohome. But the stock apears to be less risky and, when comparing its historical volatility, NXP Semiconductors NV is 1.58 times less risky than Autohome. The stock trades about -0.2 of its potential returns per unit of risk. The Autohome is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,605 in Autohome on November 5, 2024 and sell it today you would earn a total of 12.00 from holding Autohome or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXP Semiconductors NV vs. Autohome
Performance |
| Timeline |
| NXP Semiconductors |
| Autohome |
NXP Semiconductors and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and Autohome
The main advantage of trading using opposite NXP Semiconductors and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors 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.| NXP Semiconductors vs. Paycom Software | NXP Semiconductors vs. Patria Investments Limited | NXP Semiconductors vs. Verizon Communications | NXP Semiconductors vs. Globus Medical, |
| Autohome vs. Cognizant Technology Solutions | Autohome vs. Take Two Interactive Software | Autohome vs. Delta Air Lines | Autohome vs. Westinghouse Air Brake |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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