Correlation Between Martin Marietta and Autohome

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

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

Diversification Opportunities for Martin Marietta and Autohome

-0.12

Correlation Coefficient

Martin Marietta  Autohome

Good diversification

The 3 months correlation between Martin and Autohome is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials, and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and Martin Marietta 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 Martin Marietta Materials, 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 Martin Marietta i.e., Martin Marietta and Autohome go up and down completely randomly.

Pair Corralation between Martin Marietta and Autohome

If you would invest  56,250  in Martin Marietta Materials, on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Martin Marietta Materials, or generate 0.0% return on investment over 90 days.

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

Martin Marietta Materials,  vs.  Autohome

Martin Marietta Mate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Martin Marietta is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 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 Martin Marietta and Autohome

The main advantage of trading using opposite Martin Marietta and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta 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 Martin Marietta Materials, 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.