Correlation Between Grupo Televisa and IQIYI

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

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

Diversification Opportunities for Grupo Televisa and IQIYI

-0.05

Correlation Coefficient

Grupo Televisa  IQIYI

Good diversification

The 3 months correlation between Grupo and IQIYI is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Televisa SAB and iQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iQIYI Inc and Grupo Televisa 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 Grupo Televisa SAB 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 Grupo Televisa i.e., Grupo Televisa and IQIYI go up and down completely randomly.

Pair Corralation between Grupo Televisa and IQIYI

Allowing for the 90-day total investment horizon Grupo Televisa SAB is expected to under-perform the IQIYI. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Televisa SAB is 1.14 times less risky than IQIYI. The stock trades about -0.01 of its potential returns per unit of risk. The iQIYI Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  429.00  in iQIYI Inc on January 29, 2024 and sell it today you would earn a total of  70.00  from holding iQIYI Inc or generate 16.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Grupo Televisa SAB  vs.  iQIYI Inc

Grupo Televisa SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Televisa SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Grupo Televisa is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iQIYI Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iQIYI Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, IQIYI reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Televisa and IQIYI

The main advantage of trading using opposite Grupo Televisa and IQIYI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Televisa 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 Grupo Televisa SAB 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.