Correlation Between Trade Desk and Autohome

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

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

Diversification Opportunities for Trade Desk and Autohome

-0.28

Correlation Coefficient

Trade Desk  Autohome

Very good diversification

The 3 months correlation between Trade and Autohome is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and Trade Desk 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 The Trade Desk 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 Trade Desk i.e., Trade Desk and Autohome go up and down completely randomly.

Pair Corralation between Trade Desk and Autohome

Assuming the 90 days trading horizon The Trade Desk is expected to generate 1.28 times more return on investment than Autohome. However, Trade Desk is 1.28 times more volatile than Autohome. It trades about 0.08 of its potential returns per unit of risk. Autohome is currently generating about 0.01 per unit of risk. If you would invest  230.00  in The Trade Desk on September 28, 2024 and sell it today you would earn a total of  537.00  from holding The Trade Desk or generate 233.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.37%
Values	Daily Returns

The Trade Desk  vs.  Autohome

Trade Desk

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Trade Desk are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Trade Desk sustained solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Trade Desk and Autohome

The main advantage of trading using opposite Trade Desk and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Desk 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 The Trade Desk 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.