Correlation Between Qudian and KKR Co

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

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

Diversification Opportunities for Qudian and KKR Co

0.29

Correlation Coefficient

Qudian  KKR Co

Modest diversification

The 3 months correlation between Qudian and KKR is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Qudian i.e., Qudian and KKR Co go up and down completely randomly.

Pair Corralation between Qudian and KKR Co

Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 1.27 times more return on investment than KKR Co. However, Qudian is 1.27 times more volatile than KKR Co LP. It trades about 0.03 of its potential returns per unit of risk. KKR Co LP is currently generating about -0.14 per unit of risk. If you would invest  266.00  in Qudian Inc on December 17, 2024 and sell it today you would earn a total of  7.00  from holding Qudian Inc or generate 2.63% return on investment over 90 days.

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

Qudian Inc  vs.  KKR Co LP

Qudian Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qudian Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Qudian may actually be approaching a critical reversion point that can send shares even higher in April 2025.

KKR Co LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days KKR Co LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Qudian and KKR Co

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

The idea behind Qudian Inc and KKR Co LP 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.