Correlation Between Qudian and Alerus Financial

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

By analyzing existing cross correlation between Qudian Inc and Alerus Financial Corp, you can compare the effects of market volatilities on Qudian and Alerus Financial 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 Alerus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and Alerus Financial.

Diversification Opportunities for Qudian and Alerus Financial

-0.32

Correlation Coefficient

Qudian  Alerus Financial

Very good diversification

The 3 months correlation between Qudian and Alerus is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Alerus Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alerus Financial Corp 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 Alerus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alerus Financial Corp has no effect on the direction of Qudian i.e., Qudian and Alerus Financial go up and down completely randomly.

Pair Corralation between Qudian and Alerus Financial

Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 5.51 times more return on investment than Alerus Financial. However, Qudian is 5.51 times more volatile than Alerus Financial Corp. It trades about 0.15 of its potential returns per unit of risk. Alerus Financial Corp is currently generating about -0.3 per unit of risk. If you would invest  234.00  in Qudian Inc on September 23, 2024 and sell it today you would earn a total of  55.00  from holding Qudian Inc or generate 23.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Qudian Inc  vs.  Alerus Financial Corp

Qudian Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qudian Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Qudian exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alerus Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alerus Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Qudian and Alerus Financial

The main advantage of trading using opposite Qudian and Alerus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian position performs unexpectedly, Alerus Financial 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 Alerus Financial will offset losses from the drop in Alerus Financial's long position.

The idea behind Qudian Inc and Alerus Financial Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.