Correlation Between Fiverr International and Baidu

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

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

Diversification Opportunities for Fiverr International and Baidu

0.31

Correlation Coefficient

Fiverr International  Baidu

Weak diversification

The 3 months correlation between Fiverr and Baidu is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fiverr International and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Fiverr International 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 Fiverr International 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 Fiverr International i.e., Fiverr International and Baidu go up and down completely randomly.

Pair Corralation between Fiverr International and Baidu

Given the investment horizon of 90 days Fiverr International is expected to generate 1.48 times less return on investment than Baidu. In addition to that, Fiverr International is 1.09 times more volatile than Baidu Inc. It trades about 0.12 of its total potential returns per unit of risk. Baidu Inc is currently generating about 0.19 per unit of volatility. If you would invest  10,305  in Baidu Inc on February 6, 2024 and sell it today you would earn a total of  1,036  from holding Baidu Inc or generate 10.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fiverr International  vs.  Baidu Inc

Fiverr International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fiverr International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Baidu Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baidu Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Baidu may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Fiverr International and Baidu

The main advantage of trading using opposite Fiverr International and Baidu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiverr International 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 Fiverr International 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .