Correlation Between IQIYI and Live Nation

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

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

Diversification Opportunities for IQIYI and Live Nation

-0.3

Correlation Coefficient

IQIYI  Live Nation

Very good diversification

The 3 months correlation between IQIYI and Live is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment 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 Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of IQIYI i.e., IQIYI and Live Nation go up and down completely randomly.

Pair Corralation between IQIYI and Live Nation

Allowing for the 90-day total investment horizon iQIYI Inc is expected to under-perform the Live Nation. In addition to that, IQIYI is 2.25 times more volatile than Live Nation Entertainment. It trades about -0.06 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.1 per unit of volatility. If you would invest  8,982  in Live Nation Entertainment on September 14, 2024 and sell it today you would earn a total of  4,612  from holding Live Nation Entertainment or generate 51.35% return on investment over 90 days.

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

iQIYI Inc  vs.  Live Nation Entertainment

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.

Live Nation Entertainment

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Live Nation showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IQIYI and Live Nation

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

The idea behind iQIYI Inc and Live Nation Entertainment 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.