Correlation Between Baidu and TSINGTAO H
Can any of the company-specific risk be diversified away by investing in both Baidu and TSINGTAO H 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 Baidu and TSINGTAO H into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and TSINGTAO H , you can compare the effects of market volatilities on Baidu and TSINGTAO H 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 Baidu with a short position of TSINGTAO H. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and TSINGTAO H.
Diversification Opportunities for Baidu and TSINGTAO H
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baidu and TSINGTAO is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and TSINGTAO H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSINGTAO H and Baidu 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 Baidu Inc are associated (or correlated) with TSINGTAO H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSINGTAO H has no effect on the direction of Baidu i.e., Baidu and TSINGTAO H go up and down completely randomly.
Pair Corralation between Baidu and TSINGTAO H
Given the investment horizon of 90 days Baidu Inc is expected to under-perform the TSINGTAO H. But the stock apears to be less risky and, when comparing its historical volatility, Baidu Inc is 1.2 times less risky than TSINGTAO H. The stock trades about -0.11 of its potential returns per unit of risk. The TSINGTAO H is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 625.00 in TSINGTAO H on January 26, 2024 and sell it today you would earn a total of 35.00 from holding TSINGTAO H or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Baidu Inc vs. TSINGTAO H
Performance |
| Timeline |
| Baidu Inc |
| TSINGTAO H |
Baidu and TSINGTAO H Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and TSINGTAO H
The main advantage of trading using opposite Baidu and TSINGTAO H positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, TSINGTAO H 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 TSINGTAO H will offset losses from the drop in TSINGTAO H's long position.The idea behind Baidu Inc and TSINGTAO H 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.| TSINGTAO H vs. COSMOSTEEL HLDGS | TSINGTAO H vs. STEEL DYNAMICS | TSINGTAO H vs. Vienna Insurance Group | TSINGTAO H vs. QBE Insurance Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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