Correlation Between Delticom and Autohome

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

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

Diversification Opportunities for Delticom and Autohome

-0.44

Correlation Coefficient

Delticom  Autohome

Very good diversification

The 3 months correlation between Delticom and Autohome is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Delticom AG and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and Delticom 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 Delticom AG 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 ADR has no effect on the direction of Delticom i.e., Delticom and Autohome go up and down completely randomly.

Pair Corralation between Delticom and Autohome

Assuming the 90 days trading horizon Delticom AG is expected to under-perform the Autohome. But the stock apears to be less risky and, when comparing its historical volatility, Delticom AG is 1.04 times less risky than Autohome. The stock trades about 0.0 of its potential returns per unit of risk. The Autohome ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,226  in Autohome ADR on December 4, 2024 and sell it today you would earn a total of  434.00  from holding Autohome ADR or generate 19.5% return on investment over 90 days.

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

Delticom AG  vs.  Autohome ADR

Delticom AG

Risk-Adjusted Performance

Very Weak

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

Autohome ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Autohome ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, Autohome may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Delticom and Autohome

The main advantage of trading using opposite Delticom and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delticom 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 Delticom AG and Autohome ADR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.