Correlation Between IQIYI and Grupo Televisa

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Can any of the company-specific risk be diversified away by investing in both IQIYI and Grupo Televisa 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 Grupo Televisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iQIYI Inc and Grupo Televisa SAB, you can compare the effects of market volatilities on IQIYI and Grupo Televisa 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 Grupo Televisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQIYI and Grupo Televisa.

Diversification Opportunities for IQIYI and Grupo Televisa

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between IQIYI and Grupo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Grupo Televisa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Televisa SAB 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 Grupo Televisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Televisa SAB has no effect on the direction of IQIYI i.e., IQIYI and Grupo Televisa go up and down completely randomly.

Pair Corralation between IQIYI and Grupo Televisa

Allowing for the 90-day total investment horizon IQIYI is expected to generate 2.85 times less return on investment than Grupo Televisa. In addition to that, IQIYI is 1.28 times more volatile than Grupo Televisa SAB. It trades about 0.06 of its total potential returns per unit of risk. Grupo Televisa SAB is currently generating about 0.22 per unit of volatility. If you would invest  286.00  in Grupo Televisa SAB on January 17, 2024 and sell it today you would earn a total of  30.00  from holding Grupo Televisa SAB or generate 10.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

iQIYI Inc  vs.  Grupo Televisa SAB

 Performance 
       Timeline  
iQIYI Inc 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in iQIYI Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IQIYI is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
Grupo Televisa SAB 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Televisa SAB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Grupo Televisa showed solid returns over the last few months and may actually be approaching a breakup point.

IQIYI and Grupo Televisa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IQIYI and Grupo Televisa

The main advantage of trading using opposite IQIYI and Grupo Televisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQIYI position performs unexpectedly, Grupo Televisa 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 Grupo Televisa will offset losses from the drop in Grupo Televisa's long position.
The idea behind iQIYI Inc and Grupo Televisa SAB 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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