Correlation Between Schnitzer Steel and Autohome

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

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

Diversification Opportunities for Schnitzer Steel and Autohome

-0.07

Correlation Coefficient

Schnitzer Steel  Autohome

Good diversification

The 3 months correlation between Schnitzer and Autohome is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Schnitzer Steel Industries and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and Schnitzer Steel 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 Schnitzer Steel Industries 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 Schnitzer Steel i.e., Schnitzer Steel and Autohome go up and down completely randomly.

Pair Corralation between Schnitzer Steel and Autohome

Assuming the 90 days trading horizon Schnitzer Steel Industries is expected to under-perform the Autohome. In addition to that, Schnitzer Steel is 1.19 times more volatile than Autohome ADR. It trades about -0.59 of its total potential returns per unit of risk. Autohome ADR is currently generating about -0.12 per unit of volatility. If you would invest  2,492  in Autohome ADR on October 9, 2024 and sell it today you would lose (92.00) from holding Autohome ADR or give up 3.69% of portfolio value over 90 days.

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

Schnitzer Steel Industries  vs.  Autohome ADR

Schnitzer Steel Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schnitzer Steel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Autohome ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autohome ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Schnitzer Steel and Autohome

The main advantage of trading using opposite Schnitzer Steel and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schnitzer Steel 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 Schnitzer Steel Industries 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .