Correlation Between Autohome Inc and Mediaalpha Inc

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

Diversification Opportunities for Autohome Inc and Mediaalpha Inc

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Autohome and Mediaalpha is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Autohome Inc ADR and Mediaalpha Inc Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mediaalpha Inc and Autohome Inc 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 Inc ADR are associated (or correlated) with Mediaalpha Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mediaalpha Inc has no effect on the direction of Autohome Inc i.e., Autohome Inc and Mediaalpha Inc go up and down completely randomly.

Pair Corralation between Autohome Inc and Mediaalpha Inc

Given the investment horizon of 90 days Autohome Inc ADR is expected to generate 0.69 times more return on investment than Mediaalpha Inc. However, Autohome Inc ADR is 1.46 times less risky than Mediaalpha Inc. It trades about -0.08 of its potential returns per unit of risk. Mediaalpha Inc Cl is currently generating about -0.1 per unit of risk. If you would invest  3,375  in Autohome Inc ADR on July 2, 2022 and sell it today you would lose (454.00)  from holding Autohome Inc ADR or give up 13.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Autohome Inc ADR  vs.  Mediaalpha Inc Cl

 Performance (%) 
       Timeline  
Autohome ADR 
Autohome Performance
0 of 100
Over the last 90 days Autohome Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical indicators remain relatively steady which may send shares a bit higher in October 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Autohome Price Channel

Mediaalpha Inc 
Mediaalpha Performance
0 of 100
Over the last 90 days Mediaalpha Inc Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Mediaalpha Price Channel

Autohome Inc and Mediaalpha Inc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Autohome Inc and Mediaalpha Inc

The main advantage of trading using opposite Autohome Inc and Mediaalpha Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome Inc position performs unexpectedly, Mediaalpha Inc 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 Mediaalpha Inc will offset losses from the drop in Mediaalpha Inc's long position.
Autohome Inc vs. Tencent Holdings
The idea behind Autohome Inc ADR and Mediaalpha Inc Cl 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.
Mediaalpha Inc vs. Tencent Holdings
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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