Correlation Between Pinterest and Baidu

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

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

Diversification Opportunities for Pinterest and Baidu

0.38

Correlation Coefficient

Pinterest  Baidu

Weak diversification

The 3 months correlation between Pinterest and Baidu is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Pinterest 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 Pinterest 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 Pinterest i.e., Pinterest and Baidu go up and down completely randomly.

Pair Corralation between Pinterest and Baidu

Given the investment horizon of 90 days Pinterest is expected to generate 1.08 times more return on investment than Baidu. However, Pinterest is 1.08 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 -0.1 per unit of risk. If you would invest  2,845  in Pinterest on January 24, 2024 and sell it today you would earn a total of  428.00  from holding Pinterest or generate 15.04% return on investment over 90 days.

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

Pinterest  vs.  Baidu Inc

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Pinterest and Baidu

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

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.