Correlation Between Glory Star and IQIYI

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

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

Diversification Opportunities for Glory Star and IQIYI

0.7

Correlation Coefficient

Glory Star  IQIYI

Poor diversification

The 3 months correlation between Glory and IQIYI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Glory Star New and iQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iQIYI Inc and Glory Star 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 Glory Star New 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 Glory Star i.e., Glory Star and IQIYI go up and down completely randomly.

Pair Corralation between Glory Star and IQIYI

Assuming the 90 days horizon Glory Star New is expected to under-perform the IQIYI. In addition to that, Glory Star is 6.02 times more volatile than iQIYI Inc. It trades about -0.12 of its total potential returns per unit of risk. iQIYI Inc is currently generating about -0.11 per unit of volatility. If you would invest  217.00  in iQIYI Inc on October 6, 2024 and sell it today you would lose (20.00) from holding iQIYI Inc or give up 9.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	60.0%
Values	Daily Returns

Glory Star New  vs.  iQIYI Inc

Glory Star New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glory Star New has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly conflicting technical and fundamental indicators, Glory Star may actually be approaching a critical reversion point that can send shares even higher in February 2025.

iQIYI Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iQIYI Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Glory Star and IQIYI

The main advantage of trading using opposite Glory Star and IQIYI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glory Star 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 Glory Star New 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.