Correlation Between Hello and Autohome

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

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

Diversification Opportunities for Hello and Autohome

0.47

Correlation Coefficient

Hello  Autohome

Very weak diversification

The 3 months correlation between Hello and Autohome is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and Hello 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 Hello Group 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 Hello i.e., Hello and Autohome go up and down completely randomly.

Pair Corralation between Hello and Autohome

Given the investment horizon of 90 days Hello Group is expected to under-perform the Autohome. In addition to that, Hello is 1.22 times more volatile than Autohome. It trades about -0.13 of its total potential returns per unit of risk. Autohome is currently generating about -0.05 per unit of volatility. If you would invest  2,580  in Autohome on January 8, 2025 and sell it today you would lose (199.00) from holding Autohome or give up 7.71% of portfolio value over 90 days.

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

Hello Group  vs.  Autohome

Hello Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hello Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Autohome

Risk-Adjusted Performance

Very Weak

Over the last 90 days Autohome has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Hello and Autohome

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

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.