Correlation Between Baidu and Baidu

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

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

Diversification Opportunities for Baidu and Baidu

0.73

Correlation Coefficient

Baidu  Baidu

Poor diversification

The 3 months correlation between Baidu and Baidu is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc 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 Baidu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baidu Inc has no effect on the direction of Baidu i.e., Baidu and Baidu go up and down completely randomly.

Pair Corralation between Baidu and Baidu

Assuming the 90 days horizon Baidu Inc is expected to generate 1.9 times more return on investment than Baidu. However, Baidu is 1.9 times more volatile than Baidu Inc. It trades about -0.04 of its potential returns per unit of risk. Baidu Inc is currently generating about -0.11 per unit of risk. If you would invest  1,300  in Baidu Inc on January 26, 2024 and sell it today you would lose (51.00) from holding Baidu Inc or give up 3.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Baidu Inc  vs.  Baidu Inc

Baidu Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baidu Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Baidu is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Baidu Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baidu Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Baidu and Baidu

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

The idea behind Baidu Inc and Baidu Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.