Correlation Between IQIYI and WPP PLC

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

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

Diversification Opportunities for IQIYI and WPP PLC

-0.32

Correlation Coefficient

IQIYI  WPP PLC

Very good diversification

The 3 months correlation between IQIYI and WPP is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and WPP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC ADR 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 WPP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP PLC ADR has no effect on the direction of IQIYI i.e., IQIYI and WPP PLC go up and down completely randomly.

Pair Corralation between IQIYI and WPP PLC

Allowing for the 90-day total investment horizon iQIYI Inc is expected to under-perform the WPP PLC. In addition to that, IQIYI is 2.37 times more volatile than WPP PLC ADR. It trades about -0.06 of its total potential returns per unit of risk. WPP PLC ADR is currently generating about 0.01 per unit of volatility. If you would invest  5,065  in WPP PLC ADR on October 5, 2024 and sell it today you would lose (14.00) from holding WPP PLC ADR or give up 0.28% of portfolio value over 90 days.

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

iQIYI Inc  vs.  WPP PLC ADR

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.

WPP PLC ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WPP PLC ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, WPP PLC is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IQIYI and WPP PLC

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

The idea behind iQIYI Inc and WPP PLC ADR 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.