Correlation Between Hanesbrands and Baidu

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

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

Diversification Opportunities for Hanesbrands and Baidu

-0.36

Correlation Coefficient

Hanesbrands  Baidu

Very good diversification

The 3 months correlation between Hanesbrands and Baidu is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Hanesbrands 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 Hanesbrands 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 Hanesbrands i.e., Hanesbrands and Baidu go up and down completely randomly.

Pair Corralation between Hanesbrands and Baidu

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Baidu. In addition to that, Hanesbrands is 1.14 times more volatile than Baidu Inc. It trades about -0.16 of its total potential returns per unit of risk. Baidu Inc is currently generating about 0.04 per unit of volatility. If you would invest  8,230  in Baidu Inc on December 30, 2024 and sell it today you would earn a total of  410.00  from holding Baidu Inc or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Hanesbrands  vs.  Baidu Inc

Hanesbrands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hanesbrands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Baidu Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baidu Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Baidu may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hanesbrands and Baidu

The main advantage of trading using opposite Hanesbrands and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands 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 Hanesbrands 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.