Correlation Between Qudian and Cohen

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

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

Diversification Opportunities for Qudian and Cohen

-0.04

Correlation Coefficient

Qudian  Cohen

Good diversification

The 3 months correlation between Qudian and Cohen is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Cohen Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Company 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 Cohen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Company has no effect on the direction of Qudian i.e., Qudian and Cohen go up and down completely randomly.

Pair Corralation between Qudian and Cohen

Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 2.17 times more return on investment than Cohen. However, Qudian is 2.17 times more volatile than Cohen Company. It trades about -0.02 of its potential returns per unit of risk. Cohen Company is currently generating about -0.13 per unit of risk. If you would invest  294.00  in Qudian Inc on December 4, 2024 and sell it today you would lose (23.00) from holding Qudian Inc or give up 7.82% of portfolio value over 90 days.

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

Qudian Inc  vs.  Cohen Company

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 rather sound fundamental indicators, Qudian is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Cohen Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cohen Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Qudian and Cohen

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

The idea behind Qudian Inc and Cohen Company 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.