Correlation Between Facebook and IQIYI

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

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

Diversification Opportunities for Facebook and IQIYI

0.0

Correlation Coefficient

Facebook  IQIYI

Pay attention - limited upside

The 3 months correlation between Facebook and IQIYI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Facebook and iQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iQIYI Inc and Facebook 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 Facebook 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 Facebook i.e., Facebook and IQIYI go up and down completely randomly.

Pair Corralation between Facebook and IQIYI

If you would invest (100.00) in Facebook on September 20, 2024 and sell it today you would earn a total of  100.00  from holding Facebook or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Facebook  vs.  iQIYI Inc

Facebook

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Facebook has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Facebook is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iQIYI Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iQIYI Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IQIYI is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Facebook and IQIYI

The main advantage of trading using opposite Facebook and IQIYI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Facebook 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 Facebook 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.