Correlation Between Autohome ADR and NH HOTEL

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

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

Diversification Opportunities for Autohome ADR and NH HOTEL

-0.24

Correlation Coefficient

Autohome ADR  NH HOTEL

Very good diversification

The 3 months correlation between Autohome and NH5 is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and NH HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH HOTEL GROUP and Autohome ADR 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 NH HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH HOTEL GROUP has no effect on the direction of Autohome ADR i.e., Autohome ADR and NH HOTEL go up and down completely randomly.

Pair Corralation between Autohome ADR and NH HOTEL

Assuming the 90 days trading horizon Autohome ADR is expected to under-perform the NH HOTEL. But the stock apears to be less risky and, when comparing its historical volatility, Autohome ADR is 1.41 times less risky than NH HOTEL. The stock trades about 0.0 of its potential returns per unit of risk. The NH HOTEL GROUP is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  288.00  in NH HOTEL GROUP on September 26, 2024 and sell it today you would earn a total of  335.00  from holding NH HOTEL GROUP or generate 116.32% return on investment over 90 days.

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

Autohome ADR  vs.  NH HOTEL GROUP

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 nearly stable technical indicators, Autohome ADR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

NH HOTEL GROUP

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Autohome ADR and NH HOTEL

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

The idea behind Autohome ADR and NH HOTEL GROUP 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.