Correlation Between IQIYI and Facebook

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

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

Diversification Opportunities for IQIYI and Facebook

0.0

Correlation Coefficient

IQIYI  Facebook

Pay attention - limited upside

The 3 months correlation between IQIYI and Facebook is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Facebook in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Facebook 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 Facebook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Facebook has no effect on the direction of IQIYI i.e., IQIYI and Facebook go up and down completely randomly.

Pair Corralation between IQIYI and Facebook

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

iQIYI Inc  vs.  Facebook

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.

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.

Pair Trading with IQIYI and Facebook

The main advantage of trading using opposite IQIYI and Facebook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQIYI position performs unexpectedly, Facebook 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 Facebook will offset losses from the drop in Facebook's long position.

The idea behind iQIYI Inc and Facebook 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.