Correlation Between Qudian and Sprott Focus
Can any of the company-specific risk be diversified away by investing in both Qudian and Sprott Focus 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 Sprott Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qudian Inc and Sprott Focus Trust, you can compare the effects of market volatilities on Qudian and Sprott Focus 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 Sprott Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and Sprott Focus.
Diversification Opportunities for Qudian and Sprott Focus
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Qudian and Sprott is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Sprott Focus Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Focus Trust 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 Sprott Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Focus Trust has no effect on the direction of Qudian i.e., Qudian and Sprott Focus go up and down completely randomly.
Pair Corralation between Qudian and Sprott Focus
Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 3.68 times more return on investment than Sprott Focus. However, Qudian is 3.68 times more volatile than Sprott Focus Trust. It trades about 0.06 of its potential returns per unit of risk. Sprott Focus Trust is currently generating about 0.06 per unit of risk. If you would invest 203.00 in Qudian Inc on August 29, 2024 and sell it today you would earn a total of 101.00 from holding Qudian Inc or generate 49.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qudian Inc vs. Sprott Focus Trust
Performance |
| Timeline |
| Qudian Inc |
| Sprott Focus Trust |
Qudian and Sprott Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qudian and Sprott Focus
The main advantage of trading using opposite Qudian and Sprott Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian position performs unexpectedly, Sprott Focus 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 Sprott Focus will offset losses from the drop in Sprott Focus' long position.| Qudian vs. X Financial Class | Qudian vs. FinVolution Group | Qudian vs. Senmiao Technology | Qudian vs. Lexinfintech Holdings |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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