Correlation Between SWISS WATER and Autohome ADR
Can any of the company-specific risk be diversified away by investing in both SWISS WATER 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 SWISS WATER and Autohome ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and Autohome ADR, you can compare the effects of market volatilities on SWISS WATER 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 SWISS WATER with a short position of Autohome ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and Autohome ADR.
Diversification Opportunities for SWISS WATER and Autohome ADR
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SWISS and Autohome is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and SWISS WATER 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 SWISS WATER DECAFFCOFFEE 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 SWISS WATER i.e., SWISS WATER and Autohome ADR go up and down completely randomly.
Pair Corralation between SWISS WATER and Autohome ADR
Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to generate 1.01 times more return on investment than Autohome ADR. However, SWISS WATER is 1.01 times more volatile than Autohome ADR. It trades about 0.03 of its potential returns per unit of risk. Autohome ADR is currently generating about 0.0 per unit of risk. If you would invest 193.00 in SWISS WATER DECAFFCOFFEE on October 31, 2024 and sell it today you would earn a total of 35.00 from holding SWISS WATER DECAFFCOFFEE or generate 18.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. Autohome ADR
Performance |
Timeline |
SWISS WATER DECAFFCOFFEE |
Autohome ADR |
SWISS WATER and Autohome ADR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SWISS WATER and Autohome ADR
The main advantage of trading using opposite SWISS WATER and Autohome ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER 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.SWISS WATER vs. Taylor Morrison Home | ||
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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