Correlation Between Align Technology and Autohome
Can any of the company-specific risk be diversified away by investing in both Align Technology 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 Align Technology and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Autohome, you can compare the effects of market volatilities on Align Technology 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 Align Technology with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Autohome.
Diversification Opportunities for Align Technology and Autohome
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Align and Autohome is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and Align Technology 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 Align Technology 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 Align Technology i.e., Align Technology and Autohome go up and down completely randomly.
Pair Corralation between Align Technology and Autohome
Assuming the 90 days trading horizon Align Technology is expected to generate 0.82 times more return on investment than Autohome. However, Align Technology is 1.22 times less risky than Autohome. It trades about 0.03 of its potential returns per unit of risk. Autohome is currently generating about 0.01 per unit of risk. If you would invest 31,801 in Align Technology on September 23, 2024 and sell it today you would earn a total of 902.00 from holding Align Technology or generate 2.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Align Technology vs. Autohome
Performance |
Timeline |
Align Technology |
Autohome |
Align Technology and Autohome Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Align Technology and Autohome
The main advantage of trading using opposite Align Technology and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology 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.Align Technology vs. Micron Technology | Align Technology vs. Tres Tentos Agroindustrial | Align Technology vs. Paycom Software | Align Technology vs. Tyson Foods |
Check out your portfolio center.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.
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