Mean reversion is a financial term used to assume that the price of an asset will tend to converge to the average price over time. Implementation of mean reversion as a timing strategy involves both identifying the trading range of a security and calculating average prices using quantitative methods. Mean-reverting strategies apply the classic idea of selling high and buying low in the stock market, which generally performs well in volatile markets. Based on empirical analysis, this paper calculates the value of Bilibili, iQiyi and YouTube, compares the deviation index and return rate of the three companies. Subsequently, we use the deviation multiple and average return rate of historical statistics to judge the entry time. The significance of this study is that it provides a reference for Internet video companies to choose the path of mean reversion, and also provides an investment strategy for investors. These results shed light on guiding further applications of mean-revision strategy for different underlying assets.
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