Correlation Between Hello and Baidu
Can any of the company-specific risk be diversified away by investing in both Hello 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 Hello and Baidu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hello Group and Baidu Inc, you can compare the effects of market volatilities on Hello 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 Hello with a short position of Baidu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hello and Baidu.
Diversification Opportunities for Hello and Baidu
Very weak diversification
The 3 months correlation between Hello and Baidu is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Hello 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 Hello Group 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 Hello i.e., Hello and Baidu go up and down completely randomly.
Pair Corralation between Hello and Baidu
Given the investment horizon of 90 days Hello is expected to generate 2.71 times less return on investment than Baidu. But when comparing it to its historical volatility, Hello Group is 2.99 times less risky than Baidu. It trades about 0.07 of its potential returns per unit of risk. Baidu Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 999.00 in Baidu Inc on December 1, 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 Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hello Group vs. Baidu Inc
Performance |
Timeline |
Hello Group |
Baidu Inc |
Hello and Baidu Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hello and Baidu
The main advantage of trading using opposite Hello and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hello 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.Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello vs. DouYu International Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |