Correlation Between IQIYI and Core Main
Can any of the company-specific risk be diversified away by investing in both IQIYI and Core Main 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 Core Main into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iQIYI Inc and Core Main, you can compare the effects of market volatilities on IQIYI and Core Main 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 Core Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQIYI and Core Main.
Diversification Opportunities for IQIYI and Core Main
Modest diversification
The 3 months correlation between IQIYI and Core is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Core Main in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Main 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 Core Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Main has no effect on the direction of IQIYI i.e., IQIYI and Core Main go up and down completely randomly.
Pair Corralation between IQIYI and Core Main
Allowing for the 90-day total investment horizon iQIYI Inc is expected to under-perform the Core Main. In addition to that, IQIYI is 1.42 times more volatile than Core Main. It trades about -0.12 of its total potential returns per unit of risk. Core Main is currently generating about -0.03 per unit of volatility. If you would invest 5,609 in Core Main on August 30, 2024 and sell it today you would lose (898.00) from holding Core Main or give up 16.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iQIYI Inc vs. Core Main
Performance |
| Timeline |
| iQIYI Inc |
| Core Main |
IQIYI and Core Main Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQIYI and Core Main
The main advantage of trading using opposite IQIYI and Core Main positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQIYI position performs unexpectedly, Core Main 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 Core Main will offset losses from the drop in Core Main's long position.The idea behind iQIYI Inc and Core Main 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.| Core Main vs. DXP Enterprises | Core Main vs. Watsco Inc | Core Main vs. Distribution Solutions Group | Core Main vs. SiteOne Landscape Supply |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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