Correlation Between Imax Corp and IQIYI

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

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

Diversification Opportunities for Imax Corp and IQIYI

0.61

Correlation Coefficient

Imax Corp  IQIYI

Poor diversification

The 3 months correlation between Imax and IQIYI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Imax Corp and iQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iQIYI Inc and Imax 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 Imax Corp 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 Imax Corp i.e., Imax Corp and IQIYI go up and down completely randomly.

Pair Corralation between Imax Corp and IQIYI

Given the investment horizon of 90 days Imax Corp is expected to generate 1.18 times less return on investment than IQIYI. But when comparing it to its historical volatility, Imax Corp is 2.27 times less risky than IQIYI. It trades about 0.09 of its potential returns per unit of risk. iQIYI Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  208.00  in iQIYI Inc on December 27, 2024 and sell it today you would earn a total of  13.00  from holding iQIYI Inc or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Imax Corp  vs.  iQIYI Inc

Imax Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Imax Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Imax Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

iQIYI Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iQIYI Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, IQIYI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Imax Corp and IQIYI

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

The idea behind Imax Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..