Correlation Between HSBC Holdings and Baidu
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings 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 HSBC Holdings and Baidu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Holdings plc and Baidu Inc, you can compare the effects of market volatilities on HSBC Holdings 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 HSBC Holdings with a short position of Baidu. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Baidu.
Diversification Opportunities for HSBC Holdings and Baidu
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HSBC and Baidu is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and HSBC Holdings 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 HSBC Holdings plc 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 HSBC Holdings i.e., HSBC Holdings and Baidu go up and down completely randomly.
Pair Corralation between HSBC Holdings and Baidu
Assuming the 90 days trading horizon HSBC Holdings is expected to generate 5.82 times less return on investment than Baidu. But when comparing it to its historical volatility, HSBC Holdings plc is 2.38 times less risky than Baidu. It trades about 0.06 of its potential returns per unit of risk. Baidu Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,578 in Baidu Inc on November 18, 2024 and sell it today you would earn a total of 372.00 from holding Baidu Inc or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. Baidu Inc
Performance |
| Timeline |
| HSBC Holdings plc |
| Baidu Inc |
HSBC Holdings and Baidu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Baidu
The main advantage of trading using opposite HSBC Holdings and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings 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.| HSBC Holdings vs. Uber Technologies | HSBC Holdings vs. Spotify Technology SA | HSBC Holdings vs. Charter Communications | HSBC Holdings vs. Verizon Communications |
| Baidu vs. Verizon Communications | Baidu vs. Applied Materials, | Baidu vs. SK Telecom Co, | Baidu vs. Fair Isaac |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |