Correlation Between Baidu and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Baidu and Samsung Electronics 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 Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Samsung Electronics Co, you can compare the effects of market volatilities on Baidu and Samsung Electronics 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 Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Samsung Electronics.
Diversification Opportunities for Baidu and Samsung Electronics
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baidu and Samsung is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Baidu i.e., Baidu and Samsung Electronics go up and down completely randomly.
Pair Corralation between Baidu and Samsung Electronics
Assuming the 90 days trading horizon Baidu Inc is expected to generate 1.12 times more return on investment than Samsung Electronics. However, Baidu is 1.12 times more volatile than Samsung Electronics Co. It trades about 0.02 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.06 per unit of risk. If you would invest 170,259 in Baidu Inc on September 3, 2024 and sell it today you would earn a total of 6,141 from holding Baidu Inc or generate 3.61% 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. Samsung Electronics Co
Performance |
| Timeline |
| Baidu Inc |
| Samsung Electronics |
Baidu and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Samsung Electronics
The main advantage of trading using opposite Baidu and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Baidu vs. Prudential Financial | Baidu vs. Delta Air Lines | Baidu vs. Taiwan Semiconductor Manufacturing | Baidu vs. Applied Materials |
| Samsung Electronics vs. Apple Inc | Samsung Electronics vs. The Select Sector | Samsung Electronics vs. Promotora y Operadora | Samsung Electronics vs. SPDR Series Trust |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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