Correlation Between Autohome and Global X

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

By analyzing existing cross correlation between Autohome and Global X Funds, you can compare the effects of market volatilities on Autohome and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Global X.

Diversification Opportunities for Autohome and Global X

-0.51

Correlation Coefficient

Autohome  Global X

Excellent diversification

The 3 months correlation between Autohome and Global is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Autohome i.e., Autohome and Global X go up and down completely randomly.

Pair Corralation between Autohome and Global X

Assuming the 90 days trading horizon Autohome is expected to under-perform the Global X. In addition to that, Autohome is 1.25 times more volatile than Global X Funds. It trades about -0.11 of its total potential returns per unit of risk. Global X Funds is currently generating about -0.08 per unit of volatility. If you would invest  5,145  in Global X Funds on October 10, 2024 and sell it today you would lose (185.00) from holding Global X Funds or give up 3.6% of portfolio value over 90 days.

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

Autohome  vs.  Global X Funds

Autohome

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autohome has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Global X Funds

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Autohome and Global X

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

The idea behind Autohome and Global X Funds 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.