Correlation Between Baidu and Linkage Global
Can any of the company-specific risk be diversified away by investing in both Baidu and Linkage Global 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 Linkage Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Linkage Global Ordinary, you can compare the effects of market volatilities on Baidu and Linkage Global 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 Linkage Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Linkage Global.
Diversification Opportunities for Baidu and Linkage Global
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baidu and Linkage is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Linkage Global Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linkage Global Ordinary 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 Linkage Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linkage Global Ordinary has no effect on the direction of Baidu i.e., Baidu and Linkage Global go up and down completely randomly.
Pair Corralation between Baidu and Linkage Global
Given the investment horizon of 90 days Baidu Inc is expected to generate 0.48 times more return on investment than Linkage Global. However, Baidu Inc is 2.1 times less risky than Linkage Global. It trades about 0.14 of its potential returns per unit of risk. Linkage Global Ordinary is currently generating about -0.25 per unit of risk. If you would invest 8,446 in Baidu Inc on September 14, 2024 and sell it today you would earn a total of 586.00 from holding Baidu Inc or generate 6.94% 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. Linkage Global Ordinary
Performance |
| Timeline |
| Baidu Inc |
| Linkage Global Ordinary |
Baidu and Linkage Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Linkage Global
The main advantage of trading using opposite Baidu and Linkage Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Linkage Global 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 Linkage Global will offset losses from the drop in Linkage Global's long position.| Baidu vs. Tencent Music Entertainment | Baidu vs. Twilio Inc | Baidu vs. Spotify Technology SA | Baidu vs. Weibo Corp |
| Linkage Global vs. Twilio Inc | Linkage Global vs. Getty Images Holdings | Linkage Global vs. Baidu Inc | Linkage Global vs. Snap Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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