Correlation Between Outbrain and Baidu

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

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

Diversification Opportunities for Outbrain and Baidu

-0.51

Correlation Coefficient

Outbrain  Baidu

Excellent diversification

The 3 months correlation between Outbrain and Baidu is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Outbrain 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 Outbrain 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 Outbrain i.e., Outbrain and Baidu go up and down completely randomly.

Pair Corralation between Outbrain and Baidu

Allowing for the 90-day total investment horizon Outbrain is expected to under-perform the Baidu. In addition to that, Outbrain is 1.17 times more volatile than Baidu Inc. It trades about -0.28 of its total potential returns per unit of risk. Baidu Inc is currently generating about 0.01 per unit of volatility. If you would invest  8,338  in Baidu Inc on January 6, 2025 and sell it today you would lose (95.00) from holding Baidu Inc or give up 1.14% of portfolio value over 90 days.

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

Outbrain  vs.  Baidu Inc

Outbrain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Outbrain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Baidu Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baidu Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Baidu is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Outbrain and Baidu

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

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.