Correlation Between Geely Automobile and Baidu
Can any of the company-specific risk be diversified away by investing in both Geely Automobile and Baidu 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 Geely Automobile and Baidu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geely Automobile Holdings and Baidu Inc, you can compare the effects of market volatilities on Geely Automobile 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 Geely Automobile with a short position of Baidu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and Baidu.
Diversification Opportunities for Geely Automobile and Baidu
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Geely and Baidu is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Geely Automobile 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 Geely Automobile Holdings 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 Geely Automobile i.e., Geely Automobile and Baidu go up and down completely randomly.
Pair Corralation between Geely Automobile and Baidu
Assuming the 90 days horizon Geely Automobile Holdings is expected to under-perform the Baidu. In addition to that, Geely Automobile is 1.48 times more volatile than Baidu Inc. It trades about -0.15 of its total potential returns per unit of risk. Baidu Inc is currently generating about -0.21 per unit of volatility. If you would invest 8,680 in Baidu Inc on August 30, 2024 and sell it today you would lose (790.00) from holding Baidu Inc or give up 9.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. Baidu Inc
Performance |
| Timeline |
| Geely Automobile Holdings |
| Baidu Inc |
Geely Automobile and Baidu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and Baidu
The main advantage of trading using opposite Geely Automobile and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile 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.| Geely Automobile vs. SCANDMEDICAL SOLDK 040 | Geely Automobile vs. MeVis Medical Solutions | Geely Automobile vs. ONWARD MEDICAL BV | Geely Automobile vs. Diamyd Medical AB |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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