Correlation Between Qudian and Goldenbridge Acquisition
Can any of the company-specific risk be diversified away by investing in both Qudian and Goldenbridge Acquisition 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 Goldenbridge Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qudian Inc and Goldenbridge Acquisition Limited, you can compare the effects of market volatilities on Qudian and Goldenbridge Acquisition 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 Goldenbridge Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and Goldenbridge Acquisition.
Diversification Opportunities for Qudian and Goldenbridge Acquisition
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Qudian and Goldenbridge is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Goldenbridge Acquisition Limit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldenbridge Acquisition 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 Goldenbridge Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldenbridge Acquisition has no effect on the direction of Qudian i.e., Qudian and Goldenbridge Acquisition go up and down completely randomly.
Pair Corralation between Qudian and Goldenbridge Acquisition
Allowing for the 90-day total investment horizon Qudian is expected to generate 1.57 times less return on investment than Goldenbridge Acquisition. But when comparing it to its historical volatility, Qudian Inc is 2.09 times less risky than Goldenbridge Acquisition. It trades about 0.13 of its potential returns per unit of risk. Goldenbridge Acquisition Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Goldenbridge Acquisition Limited on November 2, 2024 and sell it today you would earn a total of 2.00 from holding Goldenbridge Acquisition Limited or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.21% |
| Values | Daily Returns |
Qudian Inc vs. Goldenbridge Acquisition Limit
Performance |
| Timeline |
| Qudian Inc |
| Goldenbridge Acquisition |
Qudian and Goldenbridge Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qudian and Goldenbridge Acquisition
The main advantage of trading using opposite Qudian and Goldenbridge Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian position performs unexpectedly, Goldenbridge Acquisition 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 Goldenbridge Acquisition will offset losses from the drop in Goldenbridge Acquisition's long position.The idea behind Qudian Inc and Goldenbridge Acquisition Limited 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.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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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