Correlation Between Qudian and Orient Overseas
Can any of the company-specific risk be diversified away by investing in both Qudian and Orient Overseas 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 Orient Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qudian Inc and Orient Overseas International, you can compare the effects of market volatilities on Qudian and Orient Overseas 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 Orient Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and Orient Overseas.
Diversification Opportunities for Qudian and Orient Overseas
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Qudian and Orient is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Orient Overseas International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas Inte 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 Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas Inte has no effect on the direction of Qudian i.e., Qudian and Orient Overseas go up and down completely randomly.
Pair Corralation between Qudian and Orient Overseas
Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 1.61 times more return on investment than Orient Overseas. However, Qudian is 1.61 times more volatile than Orient Overseas International. It trades about 0.13 of its potential returns per unit of risk. Orient Overseas International is currently generating about -0.28 per unit of risk. If you would invest 280.00 in Qudian Inc on November 2, 2024 and sell it today you would earn a total of 17.00 from holding Qudian Inc or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qudian Inc vs. Orient Overseas International
Performance |
| Timeline |
| Qudian Inc |
| Orient Overseas Inte |
Qudian and Orient Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qudian and Orient Overseas
The main advantage of trading using opposite Qudian and Orient Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian position performs unexpectedly, Orient Overseas 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 Orient Overseas will offset losses from the drop in Orient Overseas' long position.The idea behind Qudian Inc and Orient Overseas International 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.| Orient Overseas vs. SITC International Holdings | Orient Overseas vs. SITC International Holdings | Orient Overseas vs. Mitsui OSK Lines | Orient Overseas vs. Pacific Basin Shipping |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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