Correlation Between Autohome and Airbnb

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

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

Diversification Opportunities for Autohome and Airbnb

0.25

Correlation Coefficient

Autohome  Airbnb

Modest diversification

The 3 months correlation between Autohome and Airbnb is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and Airbnb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbnb Inc 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 Airbnb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbnb Inc has no effect on the direction of Autohome i.e., Autohome and Airbnb go up and down completely randomly.

Pair Corralation between Autohome and Airbnb

Given the investment horizon of 90 days Autohome is expected to generate 0.7 times more return on investment than Airbnb. However, Autohome is 1.43 times less risky than Airbnb. It trades about 0.09 of its potential returns per unit of risk. Airbnb Inc is currently generating about -0.03 per unit of risk. If you would invest  2,502  in Autohome on December 30, 2024 and sell it today you would earn a total of  272.00  from holding Autohome or generate 10.87% return on investment over 90 days.

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

Autohome  vs.  Airbnb Inc

Autohome

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Autohome are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, Autohome may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Airbnb Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Airbnb Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent 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.

Pair Trading with Autohome and Airbnb

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

The idea behind Autohome and Airbnb Inc 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.