Correlation Between Baidu and Hello
Can any of the company-specific risk be diversified away by investing in both Baidu and Hello 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 Baidu and Hello into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Hello Group, you can compare the effects of market volatilities on Baidu and Hello 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 Baidu with a short position of Hello. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Hello.
Diversification Opportunities for Baidu and Hello
Very weak diversification
The 3 months correlation between Baidu and Hello is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Hello Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hello Group and Baidu 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 Baidu Inc are associated (or correlated) with Hello. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hello Group has no effect on the direction of Baidu i.e., Baidu and Hello go up and down completely randomly.
Pair Corralation between Baidu and Hello
Assuming the 90 days horizon Baidu Inc is expected to generate 2.6 times more return on investment than Hello. However, Baidu is 2.6 times more volatile than Hello Group. It trades about 0.0 of its potential returns per unit of risk. Hello Group is currently generating about -0.09 per unit of risk. If you would invest 1,218 in Baidu Inc on October 26, 2024 and sell it today you would lose (46.00) from holding Baidu Inc or give up 3.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baidu Inc vs. Hello Group
Performance |
| Timeline |
| Baidu Inc |
| Hello Group |
Baidu and Hello Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Hello
The main advantage of trading using opposite Baidu and Hello positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Hello 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 Hello will offset losses from the drop in Hello's long position.| Baidu vs. Prosus | Baidu vs. Kuaishou Technology | Baidu vs. Kuaishou Technology | Baidu vs. Tencent Music Entertainment |
| Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello vs. DouYu International Holdings |
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 Positions Ratings module to 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.
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