Correlation Between Scientific Games and Autohome ADR
Can any of the company-specific risk be diversified away by investing in both Scientific Games 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 Scientific Games and Autohome ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scientific Games and Autohome ADR, you can compare the effects of market volatilities on Scientific Games 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 Scientific Games with a short position of Autohome ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and Autohome ADR.
Diversification Opportunities for Scientific Games and Autohome ADR
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scientific and Autohome is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and Scientific Games 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 Scientific Games 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 Scientific Games i.e., Scientific Games and Autohome ADR go up and down completely randomly.
Pair Corralation between Scientific Games and Autohome ADR
Assuming the 90 days horizon Scientific Games is expected to under-perform the Autohome ADR. But the stock apears to be less risky and, when comparing its historical volatility, Scientific Games is 1.02 times less risky than Autohome ADR. The stock trades about -0.03 of its potential returns per unit of risk. The Autohome ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,240 in Autohome ADR on September 21, 2024 and sell it today you would earn a total of 280.00 from holding Autohome ADR or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scientific Games vs. Autohome ADR
Performance |
| Timeline |
| Scientific Games |
| Autohome ADR |
Scientific Games and Autohome ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scientific Games and Autohome ADR
The main advantage of trading using opposite Scientific Games and Autohome ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games 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.| Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc |
| Autohome ADR vs. Tencent Holdings | Autohome ADR vs. Superior Plus Corp | Autohome ADR vs. SIVERS SEMICONDUCTORS AB | Autohome ADR vs. NorAm Drilling AS |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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