Correlation Between Baidu and TrueCar
Can any of the company-specific risk be diversified away by investing in both Baidu and TrueCar 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 TrueCar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and TrueCar, you can compare the effects of market volatilities on Baidu and TrueCar 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 TrueCar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and TrueCar.
Diversification Opportunities for Baidu and TrueCar
Good diversification
The 3 months correlation between Baidu and TrueCar is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and TrueCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueCar 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 TrueCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueCar has no effect on the direction of Baidu i.e., Baidu and TrueCar go up and down completely randomly.
Pair Corralation between Baidu and TrueCar
Assuming the 90 days horizon Baidu Inc is expected to generate 2.16 times more return on investment than TrueCar. However, Baidu is 2.16 times more volatile than TrueCar. It trades about 0.06 of its potential returns per unit of risk. TrueCar is currently generating about -0.26 per unit of risk. If you would invest 999.00 in Baidu Inc on December 2, 2024 and sell it today you would earn a total of 101.00 from holding Baidu Inc or generate 10.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Baidu Inc vs. TrueCar
Performance |
Timeline |
Baidu Inc |
TrueCar |
Baidu and TrueCar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baidu and TrueCar
The main advantage of trading using opposite Baidu and TrueCar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, TrueCar 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 TrueCar will offset losses from the drop in TrueCar's long position.Baidu vs. Prosus | Baidu vs. Kuaishou Technology | Baidu vs. Kuaishou Technology | Baidu vs. Tencent Music Entertainment |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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