Correlation Between IQIYI and Kanzhun

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

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

Diversification Opportunities for IQIYI and Kanzhun

0.88

Correlation Coefficient

IQIYI  Kanzhun

Very poor diversification

The 3 months correlation between IQIYI and Kanzhun is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Kanzhun Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kanzhun Ltd ADR 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 Kanzhun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kanzhun Ltd ADR has no effect on the direction of IQIYI i.e., IQIYI and Kanzhun go up and down completely randomly.

Pair Corralation between IQIYI and Kanzhun

Allowing for the 90-day total investment horizon iQIYI Inc is expected to generate 1.11 times more return on investment than Kanzhun. However, IQIYI is 1.11 times more volatile than Kanzhun Ltd ADR. It trades about 0.03 of its potential returns per unit of risk. Kanzhun Ltd ADR is currently generating about 0.03 per unit of risk. If you would invest  400.00  in iQIYI Inc on February 12, 2024 and sell it today you would earn a total of  89.00  from holding iQIYI Inc or generate 22.25% 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.  Kanzhun Ltd ADR

iQIYI Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iQIYI Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, IQIYI reported solid returns over the last few months and may actually be approaching a breakup point.

Kanzhun Ltd ADR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kanzhun Ltd ADR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kanzhun showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IQIYI and Kanzhun

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

The idea behind iQIYI Inc and Kanzhun Ltd ADR 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.