Correlation Between MSAD INSURANCE and Autohome

Can any of the company-specific risk be diversified away by investing in both MSAD INSURANCE 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 MSAD INSURANCE and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MSAD INSURANCE and Autohome ADR, you can compare the effects of market volatilities on MSAD INSURANCE 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 MSAD INSURANCE with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSAD INSURANCE and Autohome.

Diversification Opportunities for MSAD INSURANCE and Autohome

-0.48

Correlation Coefficient

MSAD INSURANCE  Autohome

Very good diversification

The 3 months correlation between MSAD and Autohome is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding MSAD INSURANCE and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and MSAD INSURANCE 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 MSAD INSURANCE 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 MSAD INSURANCE i.e., MSAD INSURANCE and Autohome go up and down completely randomly.

Pair Corralation between MSAD INSURANCE and Autohome

Assuming the 90 days trading horizon MSAD INSURANCE is expected to under-perform the Autohome. But the stock apears to be less risky and, when comparing its historical volatility, MSAD INSURANCE is 3.02 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 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,454  in Autohome ADR on December 2, 2024 and sell it today you would earn a total of  246.00  from holding Autohome ADR or generate 10.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MSAD INSURANCE  vs.  Autohome ADR

MSAD INSURANCE

Risk-Adjusted Performance

Very Weak

Over the last 90 days MSAD INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Autohome ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Autohome ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, Autohome reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MSAD INSURANCE and Autohome

The main advantage of trading using opposite MSAD INSURANCE and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSAD INSURANCE 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.

The idea behind MSAD INSURANCE and Autohome ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.