Correlation Between Qudian and Jackson Financial

Can any of the company-specific risk be diversified away by investing in both Qudian and Jackson 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 Jackson 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 Jackson Financial, you can compare the effects of market volatilities on Qudian and Jackson 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 Jackson Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and Jackson Financial.

Diversification Opportunities for Qudian and Jackson Financial

-0.46

Correlation Coefficient

Qudian  Jackson Financial

Very good diversification

The 3 months correlation between Qudian and Jackson is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial 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 Jackson Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Financial has no effect on the direction of Qudian i.e., Qudian and Jackson Financial go up and down completely randomly.

Pair Corralation between Qudian and Jackson Financial

Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 1.89 times more return on investment than Jackson Financial. However, Qudian is 1.89 times more volatile than Jackson Financial. It trades about 0.1 of its potential returns per unit of risk. Jackson Financial is currently generating about -0.01 per unit of risk. If you would invest  226.00  in Qudian Inc on October 23, 2024 and sell it today you would earn a total of  60.00  from holding Qudian Inc or generate 26.55% return on investment over 90 days.

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

Qudian Inc  vs.  Jackson Financial

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.

Jackson Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jackson Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jackson Financial is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Qudian and Jackson Financial

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

The idea behind Qudian Inc and Jackson Financial 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.