Correlation Between Baidu and Amazon
Can any of the company-specific risk be diversified away by investing in both Baidu and Amazon 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 Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Amazon Inc, you can compare the effects of market volatilities on Baidu and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Amazon.
Diversification Opportunities for Baidu and Amazon
Very good diversification
The 3 months correlation between Baidu and Amazon is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Baidu i.e., Baidu and Amazon go up and down completely randomly.
Pair Corralation between Baidu and Amazon
Given the investment horizon of 90 days Baidu Inc is expected to under-perform the Amazon. In addition to that, Baidu is 1.43 times more volatile than Amazon Inc. It trades about -0.02 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.1 per unit of volatility. If you would invest 10,055 in Amazon Inc on September 19, 2024 and sell it today you would earn a total of 13,060 from holding Amazon Inc or generate 129.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baidu Inc vs. Amazon Inc
Performance |
| Timeline |
| Baidu Inc |
| Amazon Inc |
Baidu and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Amazon
The main advantage of trading using opposite Baidu and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| Baidu vs. Tencent Music Entertainment | Baidu vs. Twilio Inc | Baidu vs. Spotify Technology SA | Baidu vs. Weibo Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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