Correlation Between Baidu and Kanzhun
Can any of the company-specific risk be diversified away by investing in both Baidu and Kanzhun 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 Kanzhun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Kanzhun Ltd ADR, you can compare the effects of market volatilities on Baidu and Kanzhun 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 Kanzhun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Kanzhun.
Diversification Opportunities for Baidu and Kanzhun
Poor diversification
The 3 months correlation between Baidu and Kanzhun is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Kanzhun Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kanzhun Ltd ADR 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 Kanzhun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kanzhun Ltd ADR has no effect on the direction of Baidu i.e., Baidu and Kanzhun go up and down completely randomly.
Pair Corralation between Baidu and Kanzhun
Given the investment horizon of 90 days Baidu is expected to generate 1.15 times less return on investment than Kanzhun. But when comparing it to its historical volatility, Baidu Inc is 1.0 times less risky than Kanzhun. It trades about 0.15 of its potential returns per unit of risk. Kanzhun Ltd ADR is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,332 in Kanzhun Ltd ADR on November 9, 2024 and sell it today you would earn a total of 144.00 from holding Kanzhun Ltd ADR or generate 10.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baidu Inc vs. Kanzhun Ltd ADR
Performance |
| Timeline |
| Baidu Inc |
| Kanzhun Ltd ADR |
Baidu and Kanzhun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Kanzhun
The main advantage of trading using opposite Baidu and Kanzhun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Kanzhun 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 Kanzhun will offset losses from the drop in Kanzhun's long position.| Baidu vs. Tencent Music Entertainment | Baidu vs. Twilio Inc | Baidu vs. Spotify Technology SA | Baidu vs. Weibo Corp |
| Kanzhun vs. Ziprecruiter | Kanzhun vs. Automatic Data Processing | Kanzhun vs. Robert Half International | Kanzhun vs. TrueBlue |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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