Correlation Between IQIYI and Lever Global

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

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

Diversification Opportunities for IQIYI and Lever Global

-0.72

Correlation Coefficient

IQIYI  Lever Global

Pay attention - limited upside

The 3 months correlation between IQIYI and Lever is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Lever Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lever Global 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 Lever Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lever Global has no effect on the direction of IQIYI i.e., IQIYI and Lever Global go up and down completely randomly.

Pair Corralation between IQIYI and Lever Global

Allowing for the 90-day total investment horizon iQIYI Inc is expected to under-perform the Lever Global. But the stock apears to be less risky and, when comparing its historical volatility, iQIYI Inc is 2.11 times less risky than Lever Global. The stock trades about -0.06 of its potential returns per unit of risk. The Lever Global is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Lever Global on September 30, 2024 and sell it today you would earn a total of  248.00  from holding Lever Global or generate 330.67% return on investment over 90 days.

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

iQIYI Inc  vs.  Lever Global

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 unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Lever Global

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lever Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Lever Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IQIYI and Lever Global

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

The idea behind iQIYI Inc and Lever Global 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.