Correlation Between Autohome and DTCOM Direct

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

By analyzing existing cross correlation between Autohome and DTCOM Direct, you can compare the effects of market volatilities on Autohome and DTCOM Direct 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 DTCOM Direct. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and DTCOM Direct.

Diversification Opportunities for Autohome and DTCOM Direct

0.32

Correlation Coefficient

Autohome  DTCOM Direct

Weak diversification

The 3 months correlation between Autohome and DTCOM is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Autohome and DTCOM Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTCOM Direct 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 DTCOM Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTCOM Direct has no effect on the direction of Autohome i.e., Autohome and DTCOM Direct go up and down completely randomly.

Pair Corralation between Autohome and DTCOM Direct

Assuming the 90 days trading horizon Autohome is expected to generate 0.32 times more return on investment than DTCOM Direct. However, Autohome is 3.13 times less risky than DTCOM Direct. It trades about 0.02 of its potential returns per unit of risk. DTCOM Direct is currently generating about -0.09 per unit of risk. If you would invest  1,544  in Autohome on April 20, 2025 and sell it today you would earn a total of  18.00  from holding Autohome or generate 1.17% return on investment over 90 days.

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

Autohome  vs.  DTCOM Direct

Autohome

Risk-Adjusted Performance

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. Despite somewhat strong basic indicators, Autohome is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DTCOM Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days DTCOM Direct 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 basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Autohome and DTCOM Direct

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

The idea behind Autohome and DTCOM Direct 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.