Correlation Between TT Electronics and Autohome

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

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

Diversification Opportunities for TT Electronics and Autohome

-0.12

Correlation Coefficient

TT Electronics  Autohome

Good diversification

The 3 months correlation between 7TT and Autohome is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and TT Electronics 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 TT Electronics PLC 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 TT Electronics i.e., TT Electronics and Autohome go up and down completely randomly.

Pair Corralation between TT Electronics and Autohome

Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the Autohome. In addition to that, TT Electronics is 1.32 times more volatile than Autohome ADR. It trades about -0.28 of its total potential returns per unit of risk. Autohome ADR is currently generating about -0.23 per unit of volatility. If you would invest  2,549  in Autohome ADR on October 5, 2024 and sell it today you would lose (189.00) from holding Autohome ADR or give up 7.41% of portfolio value over 90 days.

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

TT Electronics PLC  vs.  Autohome ADR

TT Electronics PLC

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days TT Electronics PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, TT Electronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Autohome ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autohome ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TT Electronics and Autohome

The main advantage of trading using opposite TT Electronics and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics 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 TT Electronics PLC 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.