Correlation Between Phoenix New and IQIYI
Can any of the company-specific risk be diversified away by investing in both Phoenix New 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 Phoenix New and IQIYI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phoenix New Media and iQIYI Inc, you can compare the effects of market volatilities on Phoenix New 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 Phoenix New with a short position of IQIYI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix New and IQIYI.
Diversification Opportunities for Phoenix New and IQIYI
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Phoenix and IQIYI is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix New Media and iQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iQIYI Inc and Phoenix New 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 Phoenix New Media 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 Phoenix New i.e., Phoenix New and IQIYI go up and down completely randomly.
Pair Corralation between Phoenix New and IQIYI
Given the investment horizon of 90 days Phoenix New Media is expected to generate 1.74 times more return on investment than IQIYI. However, Phoenix New is 1.74 times more volatile than iQIYI Inc. It trades about 0.12 of its potential returns per unit of risk. iQIYI Inc is currently generating about 0.2 per unit of risk. If you would invest 163.00 in Phoenix New Media on January 25, 2024 and sell it today you would earn a total of 19.00 from holding Phoenix New Media or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phoenix New Media vs. iQIYI Inc
Performance |
| Timeline |
| Phoenix New Media |
| iQIYI Inc |
Phoenix New and IQIYI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phoenix New and IQIYI
The main advantage of trading using opposite Phoenix New and IQIYI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix New 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 Phoenix New Media 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.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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