Correlation Between Baidu and Zedge
Can any of the company-specific risk be diversified away by investing in both Baidu and Zedge 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 Zedge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Zedge Inc, you can compare the effects of market volatilities on Baidu and Zedge 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 Zedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Zedge.
Diversification Opportunities for Baidu and Zedge
Very weak diversification
The 3 months correlation between Baidu and Zedge is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Zedge Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedge 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 Zedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zedge Inc has no effect on the direction of Baidu i.e., Baidu and Zedge go up and down completely randomly.
Pair Corralation between Baidu and Zedge
Given the investment horizon of 90 days Baidu Inc is expected to under-perform the Zedge. But the stock apears to be less risky and, when comparing its historical volatility, Baidu Inc is 1.8 times less risky than Zedge. The stock trades about -0.01 of its potential returns per unit of risk. The Zedge Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 234.00 in Zedge Inc on August 30, 2024 and sell it today you would earn a total of 37.00 from holding Zedge Inc or generate 15.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baidu Inc vs. Zedge Inc
Performance |
| Timeline |
| Baidu Inc |
| Zedge Inc |
Baidu and Zedge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Zedge
The main advantage of trading using opposite Baidu and Zedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Zedge 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 Zedge will offset losses from the drop in Zedge'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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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