Correlation Between Qudian and Lufax Holding

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

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

Diversification Opportunities for Qudian and Lufax Holding

0.06

Correlation Coefficient

Qudian  Lufax Holding

Significant diversification

The 3 months correlation between Qudian and Lufax is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Lufax Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lufax Holding 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 Lufax Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lufax Holding has no effect on the direction of Qudian i.e., Qudian and Lufax Holding go up and down completely randomly.

Pair Corralation between Qudian and Lufax Holding

Allowing for the 90-day total investment horizon Qudian Inc is expected to under-perform the Lufax Holding. But the stock apears to be less risky and, when comparing its historical volatility, Qudian Inc is 1.18 times less risky than Lufax Holding. The stock trades about -0.03 of its potential returns per unit of risk. The Lufax Holding is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  243.00  in Lufax Holding on December 27, 2024 and sell it today you would earn a total of  63.00  from holding Lufax Holding or generate 25.93% return on investment over 90 days.

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

Qudian Inc  vs.  Lufax Holding

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 latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Lufax Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lufax Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Lufax Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qudian and Lufax Holding

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

The idea behind Qudian Inc and Lufax Holding 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.