Correlation Between American Picture and IQIYI
Can any of the company-specific risk be diversified away by investing in both American Picture 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 American Picture and IQIYI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Picture House and iQIYI Inc, you can compare the effects of market volatilities on American Picture 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 American Picture with a short position of IQIYI. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Picture and IQIYI.
Diversification Opportunities for American Picture and IQIYI
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and IQIYI is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Picture House and iQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iQIYI Inc and American Picture 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 American Picture House 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 American Picture i.e., American Picture and IQIYI go up and down completely randomly.
Pair Corralation between American Picture and IQIYI
Given the investment horizon of 90 days American Picture House is expected to generate 1.12 times more return on investment than IQIYI. However, American Picture is 1.12 times more volatile than iQIYI Inc. It trades about -0.09 of its potential returns per unit of risk. iQIYI Inc is currently generating about -0.23 per unit of risk. If you would invest 28.00 in American Picture House on August 31, 2024 and sell it today you would lose (3.00) from holding American Picture House or give up 10.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Picture House vs. iQIYI Inc
Performance |
| Timeline |
| American Picture House |
| iQIYI Inc |
American Picture and IQIYI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Picture and IQIYI
The main advantage of trading using opposite American Picture and IQIYI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Picture 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 American Picture House 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.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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