Correlation Between IQIYI and Gaia

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Can any of the company-specific risk be diversified away by investing in both IQIYI and Gaia 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 Gaia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IQIYI Inc and Gaia Inc, you can compare the effects of market volatilities on IQIYI and Gaia 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 Gaia. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQIYI and Gaia.

Diversification Opportunities for IQIYI and Gaia

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between IQIYI and Gaia is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding IQIYI Inc and Gaia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaia Inc 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 Gaia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaia Inc has no effect on the direction of IQIYI i.e., IQIYI and Gaia go up and down completely randomly.

Pair Corralation between IQIYI and Gaia

Allowing for the 90-day total investment horizon IQIYI Inc is expected to under-perform the Gaia. In addition to that, IQIYI is 1.11 times more volatile than Gaia Inc. It trades about -0.05 of its total potential returns per unit of risk. Gaia Inc is currently generating about 0.01 per unit of volatility. If you would invest  298.00  in Gaia Inc on December 29, 2023 and sell it today you would lose (8.00) from holding Gaia Inc or give up 2.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

IQIYI Inc  vs.  Gaia Inc

 Performance 
       Timeline  
IQIYI Inc 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days IQIYI Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Gaia Inc 

Risk-Adjusted Performance

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Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Gaia Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal forward indicators, Gaia may actually be approaching a critical reversion point that can send shares even higher in April 2024.

IQIYI and Gaia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IQIYI and Gaia

The main advantage of trading using opposite IQIYI and Gaia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQIYI position performs unexpectedly, Gaia 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 Gaia will offset losses from the drop in Gaia's long position.
The idea behind IQIYI Inc and Gaia 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.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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