Correlation Between Take-Two Interactive and Autohome ADR

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Can any of the company-specific risk be diversified away by investing in both Take-Two Interactive and Autohome ADR 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 Take-Two Interactive and Autohome ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and Autohome ADR, you can compare the effects of market volatilities on Take-Two Interactive and Autohome ADR 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 Take-Two Interactive with a short position of Autohome ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take-Two Interactive and Autohome ADR.

Diversification Opportunities for Take-Two Interactive and Autohome ADR

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Take-Two and Autohome is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and Take-Two Interactive 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 Take Two Interactive Software are associated (or correlated) with Autohome ADR. 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 Take-Two Interactive i.e., Take-Two Interactive and Autohome ADR go up and down completely randomly.

Pair Corralation between Take-Two Interactive and Autohome ADR

Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.55 times more return on investment than Autohome ADR. However, Take Two Interactive Software is 1.81 times less risky than Autohome ADR. It trades about 0.24 of its potential returns per unit of risk. Autohome ADR is currently generating about 0.07 per unit of risk. If you would invest  14,250  in Take Two Interactive Software on September 5, 2024 and sell it today you would earn a total of  3,602  from holding Take Two Interactive Software or generate 25.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

Take Two Interactive Software  vs.  Autohome ADR

 Performance 
       Timeline  
Take Two Interactive 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Take-Two Interactive reported solid returns over the last few months and may actually be approaching a breakup point.
Autohome ADR 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Autohome ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Autohome ADR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Take-Two Interactive and Autohome ADR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Take-Two Interactive and Autohome ADR

The main advantage of trading using opposite Take-Two Interactive and Autohome ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take-Two Interactive position performs unexpectedly, Autohome ADR 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 ADR will offset losses from the drop in Autohome ADR's long position.
The idea behind Take Two Interactive Software 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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