Correlation Between News Corp and IQIYI
Can any of the company-specific risk be diversified away by investing in both News Corp 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 News Corp and IQIYI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between News Corp A and iQIYI Inc, you can compare the effects of market volatilities on News Corp 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 News Corp with a short position of IQIYI. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and IQIYI.
Diversification Opportunities for News Corp and IQIYI
Excellent diversification
The 3 months correlation between News and IQIYI is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding News Corp A and iQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iQIYI Inc and News Corp 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 News Corp A 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 News Corp i.e., News Corp and IQIYI go up and down completely randomly.
Pair Corralation between News Corp and IQIYI
Given the investment horizon of 90 days News Corp A is expected to under-perform the IQIYI. But the stock apears to be less risky and, when comparing its historical volatility, News Corp A is 5.59 times less risky than IQIYI. The stock trades about -0.34 of its potential returns per unit of risk. The iQIYI Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 202.00 in iQIYI Inc on September 22, 2024 and sell it today you would earn a total of 3.00 from holding iQIYI Inc or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
News Corp A vs. iQIYI Inc
Performance |
| Timeline |
| News Corp A |
| iQIYI Inc |
News Corp and IQIYI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News Corp and IQIYI
The main advantage of trading using opposite News Corp and IQIYI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp 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.| News Corp vs. Marcus | News Corp vs. Liberty Media | News Corp vs. Warner Music Group | News Corp vs. Fox Corp Class |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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