Correlation Between DAX Index and Baidu
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By analyzing existing cross correlation between DAX Index and Baidu Inc, you can compare the effects of market volatilities on DAX Index and Baidu 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 DAX Index with a short position of Baidu. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Baidu.
Diversification Opportunities for DAX Index and Baidu
Very weak diversification
The 3 months correlation between DAX and Baidu is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and DAX Index 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 DAX Index are associated (or correlated) with Baidu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baidu Inc has no effect on the direction of DAX Index i.e., DAX Index and Baidu go up and down completely randomly.
Pair Corralation between DAX Index and Baidu
Assuming the 90 days trading horizon DAX Index is expected to generate 0.5 times more return on investment than Baidu. However, DAX Index is 2.01 times less risky than Baidu. It trades about -0.01 of its potential returns per unit of risk. Baidu Inc is currently generating about -0.21 per unit of risk. If you would invest 1,947,807 in DAX Index on August 30, 2024 and sell it today you would lose (5,234) from holding DAX Index or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Baidu Inc
Performance |
| Timeline |
DAX Index and Baidu Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Baidu Inc
Pair trading matchups for Baidu
Pair Trading with DAX Index and Baidu
The main advantage of trading using opposite DAX Index and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Baidu 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 Baidu will offset losses from the drop in Baidu's long position.| DAX Index vs. NEWELL RUBBERMAID | DAX Index vs. APPLIED MATERIALS | DAX Index vs. Compagnie Plastic Omnium | DAX Index vs. Vulcan Materials |
| Baidu vs. Alphabet Class A | Baidu vs. Meta Platforms | Baidu vs. Tencent Holdings Ltd | Baidu vs. Meta Platforms |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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