Correlation Between IQIYI and Scholastic

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

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

Diversification Opportunities for IQIYI and Scholastic

0.19

Correlation Coefficient

IQIYI  Scholastic

Average diversification

The 3 months correlation between IQIYI and Scholastic is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Scholastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scholastic 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 Scholastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scholastic has no effect on the direction of IQIYI i.e., IQIYI and Scholastic go up and down completely randomly.

Pair Corralation between IQIYI and Scholastic

Allowing for the 90-day total investment horizon iQIYI Inc is expected to generate 0.95 times more return on investment than Scholastic. However, iQIYI Inc is 1.06 times less risky than Scholastic. It trades about 0.0 of its potential returns per unit of risk. Scholastic is currently generating about -0.3 per unit of risk. If you would invest  208.00  in iQIYI Inc on September 24, 2024 and sell it today you would lose (3.00) from holding iQIYI Inc or give up 1.44% of portfolio value over 90 days.

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

iQIYI Inc  vs.  Scholastic

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 latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Scholastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scholastic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with IQIYI and Scholastic

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

The idea behind iQIYI Inc and Scholastic 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.