Correlation Between ANGI Homeservices and Autohome

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

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

Diversification Opportunities for ANGI Homeservices and Autohome

0.62

Correlation Coefficient

ANGI Homeservices  Autohome

Poor diversification

The 3 months correlation between ANGI and Autohome is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ANGI Homeservices and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and ANGI Homeservices 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 ANGI Homeservices 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 ANGI Homeservices i.e., ANGI Homeservices and Autohome go up and down completely randomly.

Pair Corralation between ANGI Homeservices and Autohome

Given the investment horizon of 90 days ANGI Homeservices is expected to under-perform the Autohome. In addition to that, ANGI Homeservices is 1.61 times more volatile than Autohome. It trades about -0.01 of its total potential returns per unit of risk. Autohome is currently generating about 0.01 per unit of volatility. If you would invest  2,523  in Autohome on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Autohome or generate 0.0% return on investment over 90 days.

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

ANGI Homeservices  vs.  Autohome

ANGI Homeservices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANGI Homeservices has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Autohome

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Autohome has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Autohome is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ANGI Homeservices and Autohome

The main advantage of trading using opposite ANGI Homeservices and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANGI Homeservices 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 ANGI Homeservices 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.