Correlation Between Baidu and Dolphin Entertainment
Can any of the company-specific risk be diversified away by investing in both Baidu and Dolphin Entertainment 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 Baidu and Dolphin Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baidu Inc and Dolphin Entertainment, you can compare the effects of market volatilities on Baidu and Dolphin Entertainment 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 Baidu with a short position of Dolphin Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baidu and Dolphin Entertainment.
Diversification Opportunities for Baidu and Dolphin Entertainment
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Baidu and Dolphin is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment and Baidu 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 Baidu Inc are associated (or correlated) with Dolphin Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Entertainment has no effect on the direction of Baidu i.e., Baidu and Dolphin Entertainment go up and down completely randomly.
Pair Corralation between Baidu and Dolphin Entertainment
Given the investment horizon of 90 days Baidu Inc is expected to generate 0.46 times more return on investment than Dolphin Entertainment. However, Baidu Inc is 2.16 times less risky than Dolphin Entertainment. It trades about -0.11 of its potential returns per unit of risk. Dolphin Entertainment is currently generating about -0.19 per unit of risk. If you would invest 10,366 in Baidu Inc on January 26, 2024 and sell it today you would lose (447.00) from holding Baidu Inc or give up 4.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baidu Inc vs. Dolphin Entertainment
Performance |
| Timeline |
| Baidu Inc |
| Dolphin Entertainment |
Baidu and Dolphin Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baidu and Dolphin Entertainment
The main advantage of trading using opposite Baidu and Dolphin Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Dolphin Entertainment 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 Dolphin Entertainment will offset losses from the drop in Dolphin Entertainment's long position.The idea behind Baidu Inc and Dolphin Entertainment 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.| Dolphin Entertainment vs. Hall of Fame | Dolphin Entertainment vs. Wisekey International Holding | Dolphin Entertainment vs. Oriental Culture HoldingLtd | Dolphin Entertainment vs. HUMANA INC |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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