Correlation Between Baidu and Technos SA
Can any of the company-specific risk be diversified away by investing in both Baidu and Technos SA 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 Technos SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Technos SA, you can compare the effects of market volatilities on Baidu and Technos SA 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 Technos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Technos SA.
Diversification Opportunities for Baidu and Technos SA
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baidu and Technos is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Technos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technos SA 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 Technos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technos SA has no effect on the direction of Baidu i.e., Baidu and Technos SA go up and down completely randomly.
Pair Corralation between Baidu and Technos SA
Assuming the 90 days trading horizon Baidu Inc is expected to generate 0.98 times more return on investment than Technos SA. However, Baidu Inc is 1.03 times less risky than Technos SA. It trades about 0.05 of its potential returns per unit of risk. Technos SA is currently generating about 0.02 per unit of risk. If you would invest 3,270 in Baidu Inc on August 28, 2024 and sell it today you would earn a total of 219.00 from holding Baidu Inc or generate 6.7% 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. Technos SA
Performance |
| Timeline |
| Baidu Inc |
| Technos SA |
Baidu and Technos SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Technos SA
The main advantage of trading using opposite Baidu and Technos SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Technos SA 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 Technos SA will offset losses from the drop in Technos SA's long position.The idea behind Baidu Inc and Technos SA 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.| Technos SA vs. Baidu Inc | Technos SA vs. Deutsche Bank Aktiengesellschaft | Technos SA vs. HSBC Holdings plc | Technos SA vs. The Bank of |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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