Correlation Between Perion Network and Baidu

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

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

Diversification Opportunities for Perion Network and Baidu

-0.65

Correlation Coefficient

Perion Network  Baidu

Excellent diversification

The 3 months correlation between Perion and Baidu is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Perion Network and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Perion Network 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 Perion Network 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 Perion Network i.e., Perion Network and Baidu go up and down completely randomly.

Pair Corralation between Perion Network and Baidu

Given the investment horizon of 90 days Perion Network is expected to under-perform the Baidu. In addition to that, Perion Network is 1.27 times more volatile than Baidu Inc. It trades about -0.05 of its total potential returns per unit of risk. Baidu Inc is currently generating about -0.02 per unit of volatility. If you would invest  13,652  in Baidu Inc on October 3, 2024 and sell it today you would lose (5,221) from holding Baidu Inc or give up 38.24% of portfolio value over 90 days.

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

Perion Network  vs.  Baidu Inc

Perion Network

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perion Network are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Perion Network may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 unsteady performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Perion Network and Baidu

The main advantage of trading using opposite Perion Network and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perion Network 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 Perion Network 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..