Correlation Between Federal Agricultural and Qudian
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Qudian 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 Federal Agricultural and Qudian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and Qudian Inc, you can compare the effects of market volatilities on Federal Agricultural and Qudian 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 Federal Agricultural with a short position of Qudian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Qudian.
Diversification Opportunities for Federal Agricultural and Qudian
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federal and Qudian is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Qudian Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qudian Inc and Federal Agricultural 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 Federal Agricultural Mortgage are associated (or correlated) with Qudian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qudian Inc has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Qudian go up and down completely randomly.
Pair Corralation between Federal Agricultural and Qudian
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 33.19 times more return on investment than Qudian. However, Federal Agricultural is 33.19 times more volatile than Qudian Inc. It trades about 0.1 of its potential returns per unit of risk. Qudian Inc is currently generating about 0.03 per unit of risk. If you would invest 12,200 in Federal Agricultural Mortgage on August 28, 2024 and sell it today you would earn a total of 3,979 from holding Federal Agricultural Mortgage or generate 32.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 68.64% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Qudian Inc
Performance |
| Timeline |
| Federal Agricultural |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Qudian Inc |
Federal Agricultural and Qudian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Qudian
The main advantage of trading using opposite Federal Agricultural and Qudian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Qudian 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 Qudian will offset losses from the drop in Qudian's long position.| Federal Agricultural vs. PowerUp Acquisition Corp | Federal Agricultural vs. Aurora Innovation | Federal Agricultural vs. HUMANA INC | Federal Agricultural vs. Aquagold International |
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Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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