Correlation Between Datadog, and Autohome

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

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

Diversification Opportunities for Datadog, and Autohome

0.36

Correlation Coefficient

Datadog,  Autohome

Weak diversification

The 3 months correlation between Datadog, and Autohome is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Datadog, and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and Datadog, 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 Datadog, are associated (or correlated) with Autohome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome has no effect on the direction of Datadog, i.e., Datadog, and Autohome go up and down completely randomly.

Pair Corralation between Datadog, and Autohome

Assuming the 90 days trading horizon Datadog, is expected to under-perform the Autohome. But the stock apears to be less risky and, when comparing its historical volatility, Datadog, is 1.15 times less risky than Autohome. The stock trades about -0.29 of its potential returns per unit of risk. The Autohome is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,654  in Autohome on October 26, 2024 and sell it today you would earn a total of  22.00  from holding Autohome or generate 1.33% return on investment over 90 days.

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

Datadog,  vs.  Autohome

Datadog,

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Datadog, sustained solid returns over the last few months and may actually be approaching a breakup point.

Autohome

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Autohome are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Autohome is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Datadog, and Autohome

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

The idea behind Datadog, and Autohome 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.