Correlation Between China Lending and Qudian
Can any of the company-specific risk be diversified away by investing in both China Lending and Qudian 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 China Lending and Qudian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Lending Corp and Qudian Inc, you can compare the effects of market volatilities on China Lending and Qudian 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 China Lending with a short position of Qudian. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Lending and Qudian.
Diversification Opportunities for China Lending and Qudian
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Qudian is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding China Lending Corp and Qudian Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qudian Inc and China Lending 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 China Lending Corp are associated (or correlated) with Qudian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qudian Inc has no effect on the direction of China Lending i.e., China Lending and Qudian go up and down completely randomly.
Pair Corralation between China Lending and Qudian
Assuming the 90 days horizon China Lending Corp is expected to generate 10.15 times more return on investment than Qudian. However, China Lending is 10.15 times more volatile than Qudian Inc. It trades about 0.1 of its potential returns per unit of risk. Qudian Inc is currently generating about 0.09 per unit of risk. If you would invest 13.00 in China Lending Corp on September 2, 2024 and sell it today you would lose (2.00) from holding China Lending Corp or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 7.86% |
| Values | Daily Returns |
China Lending Corp vs. Qudian Inc
Performance |
| Timeline |
| China Lending Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Qudian Inc |
China Lending and Qudian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Lending and Qudian
The main advantage of trading using opposite China Lending and Qudian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Lending position performs unexpectedly, Qudian 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 Qudian will offset losses from the drop in Qudian's long position.| China Lending vs. Qudian Inc | China Lending vs. X Financial Class | China Lending vs. FinVolution Group | China Lending vs. Senmiao Technology |
| Qudian vs. X Financial Class | Qudian vs. FinVolution Group | Qudian vs. Senmiao Technology | Qudian vs. Lexinfintech Holdings |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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