Correlation Between Baidu and Asset Entities

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

Diversification Opportunities for Baidu and Asset Entities

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Baidu and Asset is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Asset Entities Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asset Entities Class 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 Asset Entities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asset Entities Class has no effect on the direction of Baidu i.e., Baidu and Asset Entities go up and down completely randomly.

Pair Corralation between Baidu and Asset Entities

Given the investment horizon of 90 days Baidu Inc is expected to under-perform the Asset Entities. But the stock apears to be less risky and, when comparing its historical volatility, Baidu Inc is 3.15 times less risky than Asset Entities. The stock trades about -0.09 of its potential returns per unit of risk. The Asset Entities Class is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  53.00  in Asset Entities Class on December 29, 2023 and sell it today you would earn a total of  18.00  from holding Asset Entities Class or generate 33.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Baidu Inc  vs.  Asset Entities Class

 Performance 
       Timeline  
Baidu Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 inconsistent 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.
Asset Entities Class 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Asset Entities Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Asset Entities unveiled solid returns over the last few months and may actually be approaching a breakup point.

Baidu and Asset Entities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baidu and Asset Entities

The main advantage of trading using opposite Baidu and Asset Entities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Asset Entities 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 Asset Entities will offset losses from the drop in Asset Entities' long position.
The idea behind Baidu Inc and Asset Entities Class 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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