Correlation Between Autohome and Siemens Energy

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

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

Diversification Opportunities for Autohome and Siemens Energy

-0.68

Correlation Coefficient

Autohome  Siemens Energy

Excellent diversification

The 3 months correlation between Autohome and Siemens is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and Siemens Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Energy AG and Autohome 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 Autohome ADR are associated (or correlated) with Siemens Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Energy AG has no effect on the direction of Autohome i.e., Autohome and Siemens Energy go up and down completely randomly.

Pair Corralation between Autohome and Siemens Energy

Assuming the 90 days trading horizon Autohome ADR is expected to generate 0.9 times more return on investment than Siemens Energy. However, Autohome ADR is 1.11 times less risky than Siemens Energy. It trades about 0.06 of its potential returns per unit of risk. Siemens Energy AG is currently generating about 0.03 per unit of risk. If you would invest  2,492  in Autohome ADR on October 13, 2024 and sell it today you would earn a total of  48.00  from holding Autohome ADR or generate 1.93% return on investment over 90 days.

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

Autohome ADR  vs.  Siemens Energy AG

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 latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Siemens Energy AG

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Energy AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Siemens Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Autohome and Siemens Energy

The main advantage of trading using opposite Autohome and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Siemens Energy 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 Siemens Energy will offset losses from the drop in Siemens Energy's long position.

The idea behind Autohome ADR and Siemens Energy AG 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.