Correlation Between IQIYI and Swiss Re
Can any of the company-specific risk be diversified away by investing in both IQIYI and Swiss Re 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 Swiss Re into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iQIYI Inc and Swiss Re AG, you can compare the effects of market volatilities on IQIYI and Swiss Re 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 Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQIYI and Swiss Re.
Diversification Opportunities for IQIYI and Swiss Re
Very good diversification
The 3 months correlation between IQIYI and Swiss is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Swiss Re AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re AG 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 Swiss Re. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Re AG has no effect on the direction of IQIYI i.e., IQIYI and Swiss Re go up and down completely randomly.
Pair Corralation between IQIYI and Swiss Re
Allowing for the 90-day total investment horizon iQIYI Inc is expected to generate 5.0 times more return on investment than Swiss Re. However, IQIYI is 5.0 times more volatile than Swiss Re AG. It trades about 0.05 of its potential returns per unit of risk. Swiss Re AG is currently generating about 0.25 per unit of risk. If you would invest 208.00 in iQIYI Inc on September 18, 2024 and sell it today you would earn a total of 6.50 from holding iQIYI Inc or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iQIYI Inc vs. Swiss Re AG
Performance |
| Timeline |
| iQIYI Inc |
| Swiss Re AG |
IQIYI and Swiss Re Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQIYI and Swiss Re
The main advantage of trading using opposite IQIYI and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQIYI position performs unexpectedly, Swiss Re 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 Swiss Re will offset losses from the drop in Swiss Re's long position.The idea behind iQIYI Inc and Swiss Re AG 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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