Correlation Between Autohome and Manufatura

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Can any of the company-specific risk be diversified away by investing in both Autohome and Manufatura 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 Manufatura into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome and Manufatura de Brinquedos, you can compare the effects of market volatilities on Autohome and Manufatura 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 Manufatura. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Manufatura.

Diversification Opportunities for Autohome and Manufatura

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Autohome and Manufatura is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and Manufatura de Brinquedos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manufatura de Brinquedos 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 Manufatura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manufatura de Brinquedos has no effect on the direction of Autohome i.e., Autohome and Manufatura go up and down completely randomly.

Pair Corralation between Autohome and Manufatura

If you would invest  1,579  in Autohome on October 7, 2024 and sell it today you would earn a total of  26.00  from holding Autohome or generate 1.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Autohome  vs.  Manufatura de Brinquedos

 Performance 
       Timeline  
Autohome 

Risk-Adjusted Performance

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Over the last 90 days Autohome has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.
Manufatura de Brinquedos 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Manufatura de Brinquedos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Manufatura is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Autohome and Manufatura Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Autohome and Manufatura

The main advantage of trading using opposite Autohome and Manufatura positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Manufatura 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 Manufatura will offset losses from the drop in Manufatura's long position.
The idea behind Autohome and Manufatura de Brinquedos 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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