Correlation Between Autohome and ANGI Homeservices

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

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

Diversification Opportunities for Autohome and ANGI Homeservices

0.62

Correlation Coefficient

Autohome  ANGI Homeservices

Poor diversification

The 3 months correlation between Autohome and ANGI is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and ANGI Homeservices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGI Homeservices and Autohome 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 Autohome are associated (or correlated) with ANGI Homeservices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGI Homeservices has no effect on the direction of Autohome i.e., Autohome and ANGI Homeservices go up and down completely randomly.

Pair Corralation between Autohome and ANGI Homeservices

Given the investment horizon of 90 days Autohome is expected to generate 6.02 times less return on investment than ANGI Homeservices. But when comparing it to its historical volatility, Autohome is 1.69 times less risky than ANGI Homeservices. It trades about 0.04 of its potential returns per unit of risk. ANGI Homeservices is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  230.00  in ANGI Homeservices on February 6, 2024 and sell it today you would earn a total of  25.50  from holding ANGI Homeservices or generate 11.09% return on investment over 90 days.

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

Autohome  vs.  ANGI Homeservices

Autohome

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Autohome are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

ANGI Homeservices

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ANGI Homeservices are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, ANGI Homeservices may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Autohome and ANGI Homeservices

The main advantage of trading using opposite Autohome and ANGI Homeservices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, ANGI Homeservices 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 ANGI Homeservices will offset losses from the drop in ANGI Homeservices' long position.

The idea behind Autohome and ANGI Homeservices 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.