Correlation Between Baidu and Genius Sports
Can any of the company-specific risk be diversified away by investing in both Baidu and Genius Sports 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 Genius Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Genius Sports, you can compare the effects of market volatilities on Baidu and Genius Sports 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 Genius Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Genius Sports.
Diversification Opportunities for Baidu and Genius Sports
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baidu and Genius is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Genius Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genius Sports 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 Genius Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genius Sports has no effect on the direction of Baidu i.e., Baidu and Genius Sports go up and down completely randomly.
Pair Corralation between Baidu and Genius Sports
Given the investment horizon of 90 days Baidu Inc is expected to under-perform the Genius Sports. But the stock apears to be less risky and, when comparing its historical volatility, Baidu Inc is 1.99 times less risky than Genius Sports. The stock trades about -0.11 of its potential returns per unit of risk. The Genius Sports is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 690.00 in Genius Sports on September 2, 2024 and sell it today you would earn a total of 314.00 from holding Genius Sports or generate 45.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baidu Inc vs. Genius Sports
Performance |
| Timeline |
| Baidu Inc |
| Genius Sports |
Baidu and Genius Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Genius Sports
The main advantage of trading using opposite Baidu and Genius Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Genius Sports 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 Genius Sports will offset losses from the drop in Genius Sports' long position.| Baidu vs. Tencent Music Entertainment | Baidu vs. Twilio Inc | Baidu vs. Spotify Technology SA | Baidu vs. Weibo Corp |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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