Correlation Between Hello and Baidu
Can any of the company-specific risk be diversified away by investing in both Hello 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 Hello and Baidu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hello Group and Baidu Inc, you can compare the effects of market volatilities on Hello 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 Hello with a short position of Baidu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hello and Baidu.
Diversification Opportunities for Hello and Baidu
Almost no diversification
The 3 months correlation between Hello and Baidu is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Hello 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 Hello Group 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 Hello i.e., Hello and Baidu go up and down completely randomly.
Pair Corralation between Hello and Baidu
Given the investment horizon of 90 days Hello Group is expected to generate 1.1 times more return on investment than Baidu. However, Hello is 1.1 times more volatile than Baidu Inc. It trades about -0.01 of its potential returns per unit of risk. Baidu Inc is currently generating about -0.03 per unit of risk. If you would invest 858.00 in Hello Group on August 27, 2024 and sell it today you would lose (222.00) from holding Hello Group or give up 25.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hello Group vs. Baidu Inc
Performance |
| Timeline |
| Hello Group |
| Baidu Inc |
Hello and Baidu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hello and Baidu
The main advantage of trading using opposite Hello and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hello 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.| Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello vs. DouYu International Holdings |
| Baidu vs. Tencent Music Entertainment | Baidu vs. Twilio Inc | Baidu vs. Spotify Technology SA | Baidu vs. Weibo Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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