Correlation Between Baidu and Match
Can any of the company-specific risk be diversified away by investing in both Baidu and Match 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 Match into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Match Group, you can compare the effects of market volatilities on Baidu and Match 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 Match. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Match.
Diversification Opportunities for Baidu and Match
Very weak diversification
The 3 months correlation between Baidu and Match is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Match Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Match 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 Match. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Match Group has no effect on the direction of Baidu i.e., Baidu and Match go up and down completely randomly.
Pair Corralation between Baidu and Match
Given the investment horizon of 90 days Baidu Inc is expected to under-perform the Match. But the stock apears to be less risky and, when comparing its historical volatility, Baidu Inc is 2.0 times less risky than Match. The stock trades about -0.24 of its potential returns per unit of risk. The Match Group is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 3,702 in Match Group on August 27, 2024 and sell it today you would lose (445.00) from holding Match Group or give up 12.02% 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. Match Group
Performance |
| Timeline |
| Baidu Inc |
| Match Group |
Baidu and Match Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Match
The main advantage of trading using opposite Baidu and Match positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Match 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 Match will offset losses from the drop in Match'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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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