Correlation Between IQIYI and IAC

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

Diversification Opportunities for IQIYI and IAC

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between IQIYI and IAC is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding IQIYI Inc and IAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAC 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 IAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAC Inc has no effect on the direction of IQIYI i.e., IQIYI and IAC go up and down completely randomly.

Pair Corralation between IQIYI and IAC

Allowing for the 90-day total investment horizon IQIYI Inc is expected to generate 1.88 times more return on investment than IAC. However, IQIYI is 1.88 times more volatile than IAC Inc. It trades about 0.02 of its potential returns per unit of risk. IAC Inc is currently generating about -0.03 per unit of risk. If you would invest  444.00  in IQIYI Inc on December 30, 2023 and sell it today you would lose (21.00) from holding IQIYI Inc or give up 4.73% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

IQIYI Inc  vs.  IAC Inc

 Performance 
       Timeline  
IQIYI Inc 

Risk-Adjusted Performance

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Over the last 90 days IQIYI Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
IAC Inc 

Risk-Adjusted Performance

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Weak
Compared to the overall equity markets, risk-adjusted returns on investments in IAC Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IAC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

IQIYI and IAC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IQIYI and IAC

The main advantage of trading using opposite IQIYI and IAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQIYI position performs unexpectedly, IAC 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 IAC will offset losses from the drop in IAC's long position.
The idea behind IQIYI Inc and IAC 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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