Correlation Between Baidu and Fiverr International

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

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

Diversification Opportunities for Baidu and Fiverr International

0.28

Correlation Coefficient

Baidu  Fiverr International

Modest diversification

The 3 months correlation between Baidu and Fiverr is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and Fiverr International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiverr International 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 Fiverr International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiverr International has no effect on the direction of Baidu i.e., Baidu and Fiverr International go up and down completely randomly.

Pair Corralation between Baidu and Fiverr International

Given the investment horizon of 90 days Baidu Inc is expected to generate 0.92 times more return on investment than Fiverr International. However, Baidu Inc is 1.09 times less risky than Fiverr International. It trades about 0.19 of its potential returns per unit of risk. Fiverr International is currently generating about 0.13 per unit of risk. If you would invest  10,305  in Baidu Inc on February 7, 2024 and sell it today you would earn a total of  1,028  from holding Baidu Inc or generate 9.98% return on investment over 90 days.

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

Baidu Inc  vs.  Fiverr International

Baidu Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baidu Inc are ranked lower than 4 (%) 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.

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.

Pair Trading with Baidu and Fiverr International

The main advantage of trading using opposite Baidu and Fiverr International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baidu position performs unexpectedly, Fiverr International 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 Fiverr International will offset losses from the drop in Fiverr International's long position.

The idea behind Baidu Inc and Fiverr International 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..