Correlation Between Spotify Technology and Autohome
Can any of the company-specific risk be diversified away by investing in both Spotify Technology 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 Spotify Technology and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Autohome, you can compare the effects of market volatilities on Spotify Technology 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 Spotify Technology with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Autohome.
Diversification Opportunities for Spotify Technology and Autohome
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Spotify and Autohome is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and Spotify Technology 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 Spotify Technology SA 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 Spotify Technology i.e., Spotify Technology and Autohome go up and down completely randomly.
Pair Corralation between Spotify Technology and Autohome
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 0.75 times more return on investment than Autohome. However, Spotify Technology SA is 1.33 times less risky than Autohome. It trades about 0.15 of its potential returns per unit of risk. Autohome is currently generating about 0.02 per unit of risk. If you would invest 10,458 in Spotify Technology SA on August 23, 2024 and sell it today you would earn a total of 58,035 from holding Spotify Technology SA or generate 554.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.4% |
| Values | Daily Returns |
Spotify Technology SA vs. Autohome
Performance |
| Timeline |
| Spotify Technology |
| Autohome |
Spotify Technology and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Autohome
The main advantage of trading using opposite Spotify Technology and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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.| Spotify Technology vs. Alphabet | Spotify Technology vs. Alphabet | Spotify Technology vs. Autohome | Spotify Technology vs. Mliuz SA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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