Correlation Between Power Solutions and Autohome

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

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

Diversification Opportunities for Power Solutions and Autohome

0.32

Correlation Coefficient

Power Solutions  Autohome

Weak diversification

The 3 months correlation between Power and Autohome is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Power Solutions International and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and Power Solutions 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 Power Solutions International 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 Power Solutions i.e., Power Solutions and Autohome go up and down completely randomly.

Pair Corralation between Power Solutions and Autohome

If you would invest  315.00  in Power Solutions International on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Power Solutions International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Power Solutions International  vs.  Autohome

Power Solutions Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Solutions International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Power Solutions is not utilizing all of its potentials. The newest 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. In spite of weak performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Power Solutions and Autohome

The main advantage of trading using opposite Power Solutions and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Solutions 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 Power Solutions International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.