Correlation Between IQIYI and Mentor Capital

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

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

Diversification Opportunities for IQIYI and Mentor Capital

-0.48

Correlation Coefficient

IQIYI  Mentor Capital

Very good diversification

The 3 months correlation between IQIYI and Mentor is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Mentor Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mentor Capital 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 Mentor Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mentor Capital has no effect on the direction of IQIYI i.e., IQIYI and Mentor Capital go up and down completely randomly.

Pair Corralation between IQIYI and Mentor Capital

Allowing for the 90-day total investment horizon iQIYI Inc is expected to generate 0.45 times more return on investment than Mentor Capital. However, iQIYI Inc is 2.2 times less risky than Mentor Capital. It trades about 0.07 of its potential returns per unit of risk. Mentor Capital is currently generating about -0.03 per unit of risk. If you would invest  197.00  in iQIYI Inc on September 13, 2024 and sell it today you would earn a total of  32.00  from holding iQIYI Inc or generate 16.24% return on investment over 90 days.

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

iQIYI Inc  vs.  Mentor Capital

iQIYI Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iQIYI Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, IQIYI reported solid returns over the last few months and may actually be approaching a breakup point.

Mentor Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mentor Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile 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.

Pair Trading with IQIYI and Mentor Capital

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

The idea behind iQIYI Inc and Mentor Capital 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.