Correlation Between Snap and Qudian
Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and Qudian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Qudian Inc, you can compare the effects of market volatilities on Snap 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 Snap with a short position of Qudian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Qudian.
Diversification Opportunities for Snap and Qudian
Poor diversification
The 3 months correlation between Snap and Qudian is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Qudian Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qudian Inc and Snap 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 Snap Inc 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 Snap i.e., Snap and Qudian go up and down completely randomly.
Pair Corralation between Snap and Qudian
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Qudian. But the stock apears to be less risky and, when comparing its historical volatility, Snap Inc is 2.45 times less risky than Qudian. The stock trades about -0.11 of its potential returns per unit of risk. The Qudian Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 235.00 in Qudian Inc on August 31, 2024 and sell it today you would earn a total of 69.00 from holding Qudian Inc or generate 29.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Qudian Inc
Performance |
| Timeline |
| Snap Inc |
| Qudian Inc |
Snap and Qudian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Qudian
The main advantage of trading using opposite Snap and Qudian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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.The idea behind Snap Inc and Qudian Inc 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.| 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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