Correlation Between IQIYI and Phoenix New
Can any of the company-specific risk be diversified away by investing in both IQIYI and Phoenix New 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 IQIYI and Phoenix New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iQIYI Inc and Phoenix New Media, you can compare the effects of market volatilities on IQIYI and Phoenix New 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 IQIYI with a short position of Phoenix New. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQIYI and Phoenix New.
Diversification Opportunities for IQIYI and Phoenix New
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IQIYI and Phoenix is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Phoenix New Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix New Media and IQIYI 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 iQIYI Inc are associated (or correlated) with Phoenix New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix New Media has no effect on the direction of IQIYI i.e., IQIYI and Phoenix New go up and down completely randomly.
Pair Corralation between IQIYI and Phoenix New
Allowing for the 90-day total investment horizon IQIYI is expected to generate 2.35 times less return on investment than Phoenix New. But when comparing it to its historical volatility, iQIYI Inc is 1.9 times less risky than Phoenix New. It trades about 0.12 of its potential returns per unit of risk. Phoenix New Media is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 163.00 in Phoenix New Media on January 24, 2024 and sell it today you would earn a total of 23.00 from holding Phoenix New Media or generate 14.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iQIYI Inc vs. Phoenix New Media
Performance |
| Timeline |
| iQIYI Inc |
| Phoenix New Media |
IQIYI and Phoenix New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQIYI and Phoenix New
The main advantage of trading using opposite IQIYI and Phoenix New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQIYI position performs unexpectedly, Phoenix New 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 Phoenix New will offset losses from the drop in Phoenix New's long position.The idea behind iQIYI Inc and Phoenix New Media 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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