Correlation Between Pintec Technology and Qudian

Can any of the company-specific risk be diversified away by investing in both Pintec Technology 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 Pintec Technology and Qudian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pintec Technology Holdings and Qudian Inc, you can compare the effects of market volatilities on Pintec Technology 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 Pintec Technology with a short position of Qudian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pintec Technology and Qudian.

Diversification Opportunities for Pintec Technology and Qudian

0.34

Correlation Coefficient

Pintec Technology  Qudian

Weak diversification

The 3 months correlation between Pintec and Qudian is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pintec Technology Holdings and Qudian Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qudian Inc and Pintec Technology 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 Pintec Technology Holdings 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 Pintec Technology i.e., Pintec Technology and Qudian go up and down completely randomly.

Pair Corralation between Pintec Technology and Qudian

Allowing for the 90-day total investment horizon Pintec Technology Holdings is expected to generate 0.7 times more return on investment than Qudian. However, Pintec Technology Holdings is 1.42 times less risky than Qudian. It trades about 0.09 of its potential returns per unit of risk. Qudian Inc is currently generating about -0.03 per unit of risk. If you would invest  91.00  in Pintec Technology Holdings on December 27, 2024 and sell it today you would earn a total of  11.00  from holding Pintec Technology Holdings or generate 12.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Pintec Technology Holdings  vs.  Qudian Inc

Pintec Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pintec Technology Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Pintec Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Qudian Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qudian Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Pintec Technology and Qudian

The main advantage of trading using opposite Pintec Technology and Qudian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pintec Technology 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 Pintec Technology Holdings 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.