Correlation Between Yirendai and Qudian
Can any of the company-specific risk be diversified away by investing in both Yirendai 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 Yirendai and Qudian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yirendai and Qudian Inc, you can compare the effects of market volatilities on Yirendai 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 Yirendai with a short position of Qudian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yirendai and Qudian.
Diversification Opportunities for Yirendai and Qudian
Poor diversification
The 3 months correlation between Yirendai and Qudian is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Yirendai and Qudian Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qudian Inc and Yirendai 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 Yirendai 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 Yirendai i.e., Yirendai and Qudian go up and down completely randomly.
Pair Corralation between Yirendai and Qudian
Considering the 90-day investment horizon Yirendai is expected to under-perform the Qudian. In addition to that, Yirendai is 2.0 times more volatile than Qudian Inc. It trades about -0.19 of its total potential returns per unit of risk. Qudian Inc is currently generating about -0.11 per unit of volatility. If you would invest 245.00 in Qudian Inc on August 28, 2024 and sell it today you would lose (16.00) from holding Qudian Inc or give up 6.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yirendai vs. Qudian Inc
Performance |
| Timeline |
| Yirendai |
| Qudian Inc |
Yirendai and Qudian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yirendai and Qudian
The main advantage of trading using opposite Yirendai and Qudian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yirendai 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.| Yirendai vs. Lexinfintech Holdings | Yirendai vs. FinVolution Group | Yirendai vs. 360 Finance | Yirendai vs. Navient Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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