Correlation Between Trivago NV and Autohome

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

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

Diversification Opportunities for Trivago NV and Autohome

-0.41

Correlation Coefficient

Trivago NV  Autohome

Very good diversification

The 3 months correlation between Trivago and Autohome is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Trivago NV and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and Trivago NV 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 Trivago NV 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 Trivago NV i.e., Trivago NV and Autohome go up and down completely randomly.

Pair Corralation between Trivago NV and Autohome

Given the investment horizon of 90 days Trivago NV is expected to generate 1.21 times more return on investment than Autohome. However, Trivago NV is 1.21 times more volatile than Autohome. It trades about 0.07 of its potential returns per unit of risk. Autohome is currently generating about 0.06 per unit of risk. If you would invest  198.00  in Trivago NV on September 4, 2024 and sell it today you would earn a total of  18.00  from holding Trivago NV or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Trivago NV  vs.  Autohome

Trivago NV

Risk-Adjusted Performance

5 of 100

Modest

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

Autohome

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Autohome are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, Autohome may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Trivago NV and Autohome

The main advantage of trading using opposite Trivago NV and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trivago NV 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 Trivago NV 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.