Correlation Between Trivago NV and Baidu

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

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

Diversification Opportunities for Trivago NV and Baidu

-0.3

Correlation Coefficient

Trivago NV  Baidu

Very good diversification

The 3 months correlation between Trivago and Baidu is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Trivago NV and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Trivago NV 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 Trivago NV 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 Trivago NV i.e., Trivago NV and Baidu go up and down completely randomly.

Pair Corralation between Trivago NV and Baidu

Given the investment horizon of 90 days Trivago NV is expected to generate 0.34 times more return on investment than Baidu. However, Trivago NV is 2.95 times less risky than Baidu. It trades about 0.06 of its potential returns per unit of risk. Baidu Inc is currently generating about 0.01 per unit of risk. If you would invest  198.00  in Trivago NV on September 4, 2024 and sell it today you would earn a total of  18.00  from holding Trivago NV or generate 9.09% return on investment over 90 days.

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

Trivago NV  vs.  Baidu Inc

Trivago NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trivago NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Trivago NV may actually be approaching a critical reversion point that can send shares even higher in January 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. Despite nearly stable fundamental indicators, Baidu is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Trivago NV and Baidu

The main advantage of trading using opposite Trivago NV and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trivago NV 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 Trivago NV 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.