Correlation Between Baidu and PropertyGuru

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

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

Diversification Opportunities for Baidu and PropertyGuru

-0.02

Correlation Coefficient

Baidu  PropertyGuru

Good diversification

The 3 months correlation between Baidu and PropertyGuru is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Baidu Inc and PropertyGuru Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PropertyGuru Group 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 PropertyGuru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PropertyGuru Group has no effect on the direction of Baidu i.e., Baidu and PropertyGuru go up and down completely randomly.

Pair Corralation between Baidu and PropertyGuru

Given the investment horizon of 90 days Baidu is expected to generate 1.69 times less return on investment than PropertyGuru. In addition to that, Baidu is 1.03 times more volatile than PropertyGuru Group. It trades about 0.15 of its total potential returns per unit of risk. PropertyGuru Group is currently generating about 0.25 per unit of volatility. If you would invest  323.00  in PropertyGuru Group on February 5, 2024 and sell it today you would earn a total of  84.00  from holding PropertyGuru Group or generate 26.01% return on investment over 90 days.

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

Baidu Inc  vs.  PropertyGuru Group

Baidu Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baidu Inc are ranked lower than 5 (%) 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.

PropertyGuru Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PropertyGuru Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, PropertyGuru unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baidu and PropertyGuru

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

The idea behind Baidu Inc and PropertyGuru Group 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.