Correlation Between Qudian and Equus Total

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Can any of the company-specific risk be diversified away by investing in both Qudian and Equus Total 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 Qudian and Equus Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qudian Inc and Equus Total Return, you can compare the effects of market volatilities on Qudian and Equus Total 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 Qudian with a short position of Equus Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and Equus Total.

Diversification Opportunities for Qudian and Equus Total

QudianEquusDiversified AwayQudianEquusDiversified Away100%
0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Qudian and Equus is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Equus Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equus Total Return and Qudian 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 Qudian Inc are associated (or correlated) with Equus Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equus Total Return has no effect on the direction of Qudian i.e., Qudian and Equus Total go up and down completely randomly.

Pair Corralation between Qudian and Equus Total

Allowing for the 90-day total investment horizon Qudian is expected to generate 1.12 times less return on investment than Equus Total. But when comparing it to its historical volatility, Qudian Inc is 1.11 times less risky than Equus Total. It trades about 0.11 of its potential returns per unit of risk. Equus Total Return is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  121.00  in Equus Total Return on November 23, 2024 and sell it today you would earn a total of  9.00  from holding Equus Total Return or generate 7.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Qudian Inc  vs.  Equus Total Return

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-100102030
JavaScript chart by amCharts 3.21.15QD EQS
       Timeline  
Qudian Inc 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Qudian Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Qudian exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.42.62.833.23.4
Equus Total Return 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Equus Total Return are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Equus Total unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.051.11.151.21.251.31.351.4

Qudian and Equus Total Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-16.81-12.59-8.37-4.150.07034.278.6913.1117.5321.95 0.0100.0120.0140.0160.0180.0200.0220.024
JavaScript chart by amCharts 3.21.15QD EQS
       Returns  

Pair Trading with Qudian and Equus Total

The main advantage of trading using opposite Qudian and Equus Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian position performs unexpectedly, Equus Total 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 Equus Total will offset losses from the drop in Equus Total's long position.
The idea behind Qudian Inc and Equus Total Return 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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