Correlation Between Baidu and Nemak S
Can any of the company-specific risk be diversified away by investing in both Baidu and Nemak S 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 Nemak S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Nemak S A, you can compare the effects of market volatilities on Baidu and Nemak S 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 Nemak S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Nemak S.
Diversification Opportunities for Baidu and Nemak S
Weak diversification
The 3 months correlation between Baidu and Nemak is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Nemak S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nemak S A 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 Nemak S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nemak S A has no effect on the direction of Baidu i.e., Baidu and Nemak S go up and down completely randomly.
Pair Corralation between Baidu and Nemak S
Assuming the 90 days trading horizon Baidu Inc is expected to generate 0.96 times more return on investment than Nemak S. However, Baidu Inc is 1.05 times less risky than Nemak S. It trades about -0.02 of its potential returns per unit of risk. Nemak S A is currently generating about -0.02 per unit of risk. If you would invest 252,933 in Baidu Inc on November 28, 2024 and sell it today you would lose (72,333) from holding Baidu Inc or give up 28.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baidu Inc vs. Nemak S A
Performance |
| Timeline |
| Baidu Inc |
| Nemak S A |
Baidu and Nemak S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Nemak S
The main advantage of trading using opposite Baidu and Nemak S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Nemak S 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 Nemak S will offset losses from the drop in Nemak S's long position.| Baidu vs. Deutsche Bank Aktiengesellschaft | Baidu vs. The Bank of | Baidu vs. DXC Technology | Baidu vs. CVS Health |
| Nemak S vs. DXC Technology | Nemak S vs. The Home Depot | Nemak S vs. Verizon Communications | Nemak S vs. GMxico Transportes SAB |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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