Correlation Between Technos SA and Baidu

Can any of the company-specific risk be diversified away by investing in both Technos SA 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 Technos SA and Baidu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Technos SA and Baidu Inc, you can compare the effects of market volatilities on Technos SA 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 Technos SA with a short position of Baidu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technos SA and Baidu.

Diversification Opportunities for Technos SA and Baidu

-0.12

Correlation Coefficient

Technos SA  Baidu

Good diversification

The 3 months correlation between Technos and Baidu is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Technos SA and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Technos SA 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 Technos 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 Technos SA i.e., Technos SA and Baidu go up and down completely randomly.

Pair Corralation between Technos SA and Baidu

Assuming the 90 days trading horizon Technos SA is expected to generate 1.04 times less return on investment than Baidu. In addition to that, Technos SA is 1.09 times more volatile than Baidu Inc. It trades about 0.08 of its total potential returns per unit of risk. Baidu Inc is currently generating about 0.09 per unit of volatility. If you would invest  3,325  in Baidu Inc on September 13, 2024 and sell it today you would earn a total of  483.00  from holding Baidu Inc or generate 14.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Technos SA  vs.  Baidu Inc

Technos SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Technos SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Technos SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Baidu Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baidu Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Baidu sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Technos SA and Baidu

The main advantage of trading using opposite Technos SA and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technos SA 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.

The idea behind Technos SA and Baidu Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.