Correlation Between Pernod Ricard and Autohome ADR
Can any of the company-specific risk be diversified away by investing in both Pernod Ricard 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 Pernod Ricard and Autohome ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pernod Ricard SA and Autohome ADR, you can compare the effects of market volatilities on Pernod Ricard 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 Pernod Ricard with a short position of Autohome ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and Autohome ADR.
Diversification Opportunities for Pernod Ricard and Autohome ADR
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pernod and Autohome is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and Pernod Ricard 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 Pernod Ricard SA 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 Pernod Ricard i.e., Pernod Ricard and Autohome ADR go up and down completely randomly.
Pair Corralation between Pernod Ricard and Autohome ADR
Assuming the 90 days trading horizon Pernod Ricard SA is expected to under-perform the Autohome ADR. But the stock apears to be less risky and, when comparing its historical volatility, Pernod Ricard SA is 1.05 times less risky than Autohome ADR. The stock trades about -0.29 of its potential returns per unit of risk. The Autohome ADR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,600 in Autohome ADR on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Autohome ADR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pernod Ricard SA vs. Autohome ADR
Performance |
| Timeline |
| Pernod Ricard SA |
| Autohome ADR |
Pernod Ricard and Autohome ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pernod Ricard and Autohome ADR
The main advantage of trading using opposite Pernod Ricard and Autohome ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pernod Ricard 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.| Pernod Ricard vs. Autohome ADR | Pernod Ricard vs. MAGNUM MINING EXP | Pernod Ricard vs. ANGI Homeservices | Pernod Ricard vs. Tri Pointe Homes |
| Autohome ADR vs. SCIENCE IN SPORT | Autohome ADR vs. Air Transport Services | Autohome ADR vs. AVITA Medical | Autohome ADR vs. Fukuyama Transporting Co |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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