Correlation Between Rossi Residencial and Baidu
Can any of the company-specific risk be diversified away by investing in both Rossi Residencial 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 Rossi Residencial and Baidu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rossi Residencial SA and Baidu Inc, you can compare the effects of market volatilities on Rossi Residencial 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 Rossi Residencial with a short position of Baidu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rossi Residencial and Baidu.
Diversification Opportunities for Rossi Residencial and Baidu
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rossi and Baidu is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Rossi Residencial SA and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Rossi Residencial 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 Rossi Residencial SA 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 Rossi Residencial i.e., Rossi Residencial and Baidu go up and down completely randomly.
Pair Corralation between Rossi Residencial and Baidu
Assuming the 90 days trading horizon Rossi Residencial SA is expected to generate 1.19 times more return on investment than Baidu. However, Rossi Residencial is 1.19 times more volatile than Baidu Inc. It trades about 0.03 of its potential returns per unit of risk. Baidu Inc is currently generating about 0.0 per unit of risk. If you would invest 242.00 in Rossi Residencial SA on August 28, 2024 and sell it today you would earn a total of 82.00 from holding Rossi Residencial SA or generate 33.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Rossi Residencial SA vs. Baidu Inc
Performance |
| Timeline |
| Rossi Residencial |
| Baidu Inc |
Rossi Residencial and Baidu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rossi Residencial and Baidu
The main advantage of trading using opposite Rossi Residencial and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rossi Residencial 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.| Rossi Residencial vs. Baidu Inc | Rossi Residencial vs. Deutsche Bank Aktiengesellschaft | Rossi Residencial vs. HSBC Holdings plc | Rossi Residencial vs. The Bank of |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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