Correlation Between Nextdoor Holdings and Baidu

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

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

Diversification Opportunities for Nextdoor Holdings and Baidu

-0.05

Correlation Coefficient

Nextdoor Holdings  Baidu

Good diversification

The 3 months correlation between Nextdoor and Baidu is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nextdoor Holdings and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Nextdoor Holdings 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 Nextdoor Holdings 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 Nextdoor Holdings i.e., Nextdoor Holdings and Baidu go up and down completely randomly.

Pair Corralation between Nextdoor Holdings and Baidu

Given the investment horizon of 90 days Nextdoor Holdings is expected to generate 1.27 times more return on investment than Baidu. However, Nextdoor Holdings is 1.27 times more volatile than Baidu Inc. It trades about 0.03 of its potential returns per unit of risk. Baidu Inc is currently generating about -0.01 per unit of risk. If you would invest  215.00  in Nextdoor Holdings on September 20, 2024 and sell it today you would earn a total of  13.00  from holding Nextdoor Holdings or generate 6.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nextdoor Holdings  vs.  Baidu Inc

Nextdoor Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextdoor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Nextdoor Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Baidu Inc

Risk-Adjusted Performance

3 of 100

Insignificant

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. In spite of comparatively unsteady fundamental indicators, Baidu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nextdoor Holdings and Baidu

The main advantage of trading using opposite Nextdoor Holdings and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextdoor Holdings 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 Nextdoor Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.