Correlation Between Qudian and Bukit Jalil

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

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

Diversification Opportunities for Qudian and Bukit Jalil

-0.26

Correlation Coefficient

Qudian  Bukit Jalil

Very good diversification

The 3 months correlation between Qudian and Bukit is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Bukit Jalil Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Jalil Global 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 Bukit Jalil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Jalil Global has no effect on the direction of Qudian i.e., Qudian and Bukit Jalil go up and down completely randomly.

Pair Corralation between Qudian and Bukit Jalil

Allowing for the 90-day total investment horizon Qudian is expected to generate 17.7 times less return on investment than Bukit Jalil. But when comparing it to its historical volatility, Qudian Inc is 10.49 times less risky than Bukit Jalil. It trades about 0.07 of its potential returns per unit of risk. Bukit Jalil Global is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5.53  in Bukit Jalil Global on October 5, 2024 and sell it today you would lose (1.93) from holding Bukit Jalil Global or give up 34.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	29.23%
Values	Daily Returns

Qudian Inc  vs.  Bukit Jalil Global

Qudian Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qudian Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Qudian exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bukit Jalil Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bukit Jalil Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Bukit Jalil showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qudian and Bukit Jalil

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

The idea behind Qudian Inc and Bukit Jalil Global 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.