Correlation Between Spotify Technology and Baidu
Can any of the company-specific risk be diversified away by investing in both Spotify Technology 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 Spotify Technology and Baidu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Baidu Inc, you can compare the effects of market volatilities on Spotify Technology 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 Spotify Technology with a short position of Baidu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Baidu.
Diversification Opportunities for Spotify Technology and Baidu
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Spotify and Baidu is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Spotify Technology 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 Spotify Technology 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 Spotify Technology i.e., Spotify Technology and Baidu go up and down completely randomly.
Pair Corralation between Spotify Technology and Baidu
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 0.98 times more return on investment than Baidu. However, Spotify Technology SA is 1.02 times less risky than Baidu. It trades about 0.28 of its potential returns per unit of risk. Baidu Inc is currently generating about 0.16 per unit of risk. If you would invest 75,896 in Spotify Technology SA on November 18, 2024 and sell it today you would earn a total of 15,292 from holding Spotify Technology SA or generate 20.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spotify Technology SA vs. Baidu Inc
Performance |
| Timeline |
| Spotify Technology |
| Baidu Inc |
Spotify Technology and Baidu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Baidu
The main advantage of trading using opposite Spotify Technology and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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.| Spotify Technology vs. Align Technology | Spotify Technology vs. DXC Technology | Spotify Technology vs. DENTSPLY SIRONA | Spotify Technology vs. United States Steel |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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