Correlation Between NEXANS ADR and Autohome
Can any of the company-specific risk be diversified away by investing in both NEXANS ADR 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 NEXANS ADR and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXANS ADR EO and Autohome ADR, you can compare the effects of market volatilities on NEXANS ADR 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 NEXANS ADR with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXANS ADR and Autohome.
Diversification Opportunities for NEXANS ADR and Autohome
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NEXANS and Autohome is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NEXANS ADR EO and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and NEXANS ADR 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 NEXANS ADR EO 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 NEXANS ADR i.e., NEXANS ADR and Autohome go up and down completely randomly.
Pair Corralation between NEXANS ADR and Autohome
Assuming the 90 days trading horizon NEXANS ADR EO is expected to under-perform the Autohome. But the stock apears to be less risky and, when comparing its historical volatility, NEXANS ADR EO is 1.54 times less risky than Autohome. The stock trades about -0.13 of its potential returns per unit of risk. The Autohome ADR is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,360 in Autohome ADR on November 3, 2024 and sell it today you would earn a total of 420.00 from holding Autohome ADR or generate 17.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXANS ADR EO vs. Autohome ADR
Performance |
| Timeline |
| NEXANS ADR EO |
| Autohome ADR |
NEXANS ADR and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXANS ADR and Autohome
The main advantage of trading using opposite NEXANS ADR and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXANS ADR 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.| NEXANS ADR vs. Olympic Steel | NEXANS ADR vs. ANGANG STEEL H | NEXANS ADR vs. SAN MIGUEL BREWERY | NEXANS ADR vs. KOBE STEEL LTD |
| Autohome vs. Alphabet Class A | Autohome vs. Alphabet Class A | Autohome vs. Alphabet | Autohome vs. Meta Platforms |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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