Correlation Between Qudian and Seven Hills
Can any of the company-specific risk be diversified away by investing in both Qudian and Seven Hills 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 Seven Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qudian Inc and Seven Hills Realty, you can compare the effects of market volatilities on Qudian and Seven Hills 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 Seven Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and Seven Hills.
Diversification Opportunities for Qudian and Seven Hills
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Qudian and Seven is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Seven Hills Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven Hills Realty 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 Seven Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven Hills Realty has no effect on the direction of Qudian i.e., Qudian and Seven Hills go up and down completely randomly.
Pair Corralation between Qudian and Seven Hills
Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 2.0 times more return on investment than Seven Hills. However, Qudian is 2.0 times more volatile than Seven Hills Realty. It trades about 0.08 of its potential returns per unit of risk. Seven Hills Realty is currently generating about 0.08 per unit of risk. If you would invest 84.00 in Qudian Inc on August 28, 2024 and sell it today you would earn a total of 145.00 from holding Qudian Inc or generate 172.62% 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. Seven Hills Realty
Performance |
| Timeline |
| Qudian Inc |
| Seven Hills Realty |
Qudian and Seven Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qudian and Seven Hills
The main advantage of trading using opposite Qudian and Seven Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian position performs unexpectedly, Seven Hills 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 Seven Hills will offset losses from the drop in Seven Hills' long position.The idea behind Qudian Inc and Seven Hills Realty 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.| Seven Hills vs. Chicago Atlantic Real | Seven Hills vs. Rithm Capital Corp | Seven Hills vs. Nexpoint Real Estate | Seven Hills vs. Franklin BSP Realty |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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