Correlation Between IQIYI and Bilibili
Can any of the company-specific risk be diversified away by investing in both IQIYI and Bilibili 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 Bilibili into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iQIYI Inc and Bilibili, you can compare the effects of market volatilities on IQIYI and Bilibili 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 Bilibili. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQIYI and Bilibili.
Diversification Opportunities for IQIYI and Bilibili
Very poor diversification
The 3 months correlation between IQIYI and Bilibili is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Bilibili in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilibili 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 Bilibili. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilibili has no effect on the direction of IQIYI i.e., IQIYI and Bilibili go up and down completely randomly.
Pair Corralation between IQIYI and Bilibili
Allowing for the 90-day total investment horizon IQIYI is expected to generate 1.5 times less return on investment than Bilibili. But when comparing it to its historical volatility, iQIYI Inc is 1.26 times less risky than Bilibili. It trades about 0.11 of its potential returns per unit of risk. Bilibili is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,074 in Bilibili on January 24, 2024 and sell it today you would earn a total of 100.00 from holding Bilibili or generate 9.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iQIYI Inc vs. Bilibili
Performance |
| Timeline |
| iQIYI Inc |
| Bilibili |
IQIYI and Bilibili Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQIYI and Bilibili
The main advantage of trading using opposite IQIYI and Bilibili positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQIYI position performs unexpectedly, Bilibili 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 Bilibili will offset losses from the drop in Bilibili's long position.The idea behind iQIYI Inc and Bilibili 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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