Correlation Between 00108WAF7 and IQIYI

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 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 00108WAF7 and IQIYI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX INC and iQIYI Inc, you can compare the effects of market volatilities on 00108WAF7 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 00108WAF7 with a short position of IQIYI. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and IQIYI.

Diversification Opportunities for 00108WAF7 and IQIYI

-0.07

Correlation Coefficient

00108WAF7  IQIYI

Good diversification

The 3 months correlation between 00108WAF7 and IQIYI is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and iQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iQIYI Inc and 00108WAF7 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 AEP TEX INC 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 00108WAF7 i.e., 00108WAF7 and IQIYI go up and down completely randomly.

Pair Corralation between 00108WAF7 and IQIYI

Assuming the 90 days trading horizon AEP TEX INC is expected to generate 29.07 times more return on investment than IQIYI. However, 00108WAF7 is 29.07 times more volatile than iQIYI Inc. It trades about 0.13 of its potential returns per unit of risk. iQIYI Inc is currently generating about 0.08 per unit of risk. If you would invest  7,746  in AEP TEX INC on September 12, 2024 and sell it today you would lose (78.00) from holding AEP TEX INC or give up 1.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

AEP TEX INC  vs.  iQIYI Inc

AEP TEX INC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 00108WAF7 sustained solid returns over the last few months and may actually be approaching a breakup point.

iQIYI Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iQIYI Inc are ranked lower than 6 (%) 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.

Pair Trading with 00108WAF7 and IQIYI

The main advantage of trading using opposite 00108WAF7 and IQIYI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 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 AEP TEX INC 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.