Correlation Between SentinelOne and IQIYI

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

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

Diversification Opportunities for SentinelOne and IQIYI

-0.78

Correlation Coefficient

SentinelOne  IQIYI

Pay attention - limited upside

The 3 months correlation between SentinelOne and IQIYI is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and iQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iQIYI Inc and SentinelOne 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 SentinelOne are associated (or correlated) with IQIYI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iQIYI Inc has no effect on the direction of SentinelOne i.e., SentinelOne and IQIYI go up and down completely randomly.

Pair Corralation between SentinelOne and IQIYI

Taking into account the 90-day investment horizon SentinelOne is expected to generate 1.18 times more return on investment than IQIYI. However, SentinelOne is 1.18 times more volatile than iQIYI Inc. It trades about 0.05 of its potential returns per unit of risk. iQIYI Inc is currently generating about -0.02 per unit of risk. If you would invest  1,571  in SentinelOne on January 29, 2024 and sell it today you would earn a total of  585.00  from holding SentinelOne or generate 37.24% return on investment over 90 days.

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

SentinelOne  vs.  iQIYI Inc

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

iQIYI Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iQIYI Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, IQIYI reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and IQIYI

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

The idea behind SentinelOne and iQIYI 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.