Correlation Between Baidu and Cia De
Can any of the company-specific risk be diversified away by investing in both Baidu and Cia De 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 Cia De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Cia de Ferro, you can compare the effects of market volatilities on Baidu and Cia De 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 Cia De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Cia De.
Diversification Opportunities for Baidu and Cia De
Very good diversification
The 3 months correlation between Baidu and Cia is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Cia de Ferro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia de Ferro 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 Cia De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia de Ferro has no effect on the direction of Baidu i.e., Baidu and Cia De go up and down completely randomly.
Pair Corralation between Baidu and Cia De
Assuming the 90 days trading horizon Baidu is expected to generate 147.41 times less return on investment than Cia De. But when comparing it to its historical volatility, Baidu Inc is 5.35 times less risky than Cia De. It trades about 0.0 of its potential returns per unit of risk. Cia de Ferro is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,297 in Cia de Ferro on August 23, 2024 and sell it today you would lose (496.00) from holding Cia de Ferro or give up 38.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Baidu Inc vs. Cia de Ferro
Performance |
| Timeline |
| Baidu Inc |
| Cia de Ferro |
Baidu and Cia De Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Cia De
The main advantage of trading using opposite Baidu and Cia De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Cia De 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 Cia De will offset losses from the drop in Cia De's long position.The idea behind Baidu Inc and Cia de Ferro pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cia De vs. Companhia Siderrgica Nacional | Cia De vs. Gerdau SA | Cia De vs. Metalurgica Gerdau SA | Cia De vs. Companhia Energtica de |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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