Correlation Between Tencent Holdings and Autohome ADR
Can any of the company-specific risk be diversified away by investing in both Tencent Holdings 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 Tencent Holdings and Autohome ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tencent Holdings Ltd and Autohome ADR, you can compare the effects of market volatilities on Tencent Holdings 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 Tencent Holdings with a short position of Autohome ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Holdings and Autohome ADR.
Diversification Opportunities for Tencent Holdings and Autohome ADR
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tencent and Autohome is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Holdings Ltd and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and Tencent Holdings 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 Tencent Holdings Ltd 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 Tencent Holdings i.e., Tencent Holdings and Autohome ADR go up and down completely randomly.
Pair Corralation between Tencent Holdings and Autohome ADR
Assuming the 90 days trading horizon Tencent Holdings Ltd is expected to generate 0.93 times more return on investment than Autohome ADR. However, Tencent Holdings Ltd is 1.08 times less risky than Autohome ADR. It trades about 0.02 of its potential returns per unit of risk. Autohome ADR is currently generating about 0.0 per unit of risk. If you would invest 4,455 in Tencent Holdings Ltd on October 25, 2024 and sell it today you would earn a total of 265.00 from holding Tencent Holdings Ltd or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Holdings Ltd vs. Autohome ADR
Performance |
| Timeline |
| Tencent Holdings |
| Autohome ADR |
Tencent Holdings and Autohome ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Holdings and Autohome ADR
The main advantage of trading using opposite Tencent Holdings and Autohome ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Holdings 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.| Tencent Holdings vs. Japan Medical Dynamic | Tencent Holdings vs. Genertec Universal Medical | Tencent Holdings vs. PEPTONIC MEDICAL | Tencent Holdings vs. UNIQA INSURANCE GR |
| Autohome ADR vs. Cass Information Systems | Autohome ADR vs. S E BANKEN A | Autohome ADR vs. Chiba Bank | Autohome ADR vs. CDN IMPERIAL BANK |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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