Correlation Between STMicroelectronics and Autohome
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics 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 STMicroelectronics and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Autohome ADR, you can compare the effects of market volatilities on STMicroelectronics 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 STMicroelectronics with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Autohome.
Diversification Opportunities for STMicroelectronics and Autohome
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and Autohome is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and STMicroelectronics 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 STMicroelectronics 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 ADR has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Autohome go up and down completely randomly.
Pair Corralation between STMicroelectronics and Autohome
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Autohome. In addition to that, STMicroelectronics is 1.17 times more volatile than Autohome ADR. It trades about -0.11 of its total potential returns per unit of risk. Autohome ADR is currently generating about -0.01 per unit of volatility. If you would invest 2,600 in Autohome ADR on August 29, 2024 and sell it today you would lose (20.00) from holding Autohome ADR or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Autohome ADR
Performance |
| Timeline |
| STMicroelectronics |
| Autohome ADR |
STMicroelectronics and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Autohome
The main advantage of trading using opposite STMicroelectronics and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics 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.| STMicroelectronics vs. Align Technology | STMicroelectronics vs. JJ SNACK FOODS | STMicroelectronics vs. Wayside Technology Group | STMicroelectronics vs. Austevoll Seafood ASA |
| Autohome vs. DeVry Education Group | Autohome vs. Vulcan Materials | Autohome vs. CHINA EDUCATION GROUP | Autohome vs. STRAYER EDUCATION |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |