Correlation Between Qudian and Perella Weinberg

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

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

Diversification Opportunities for Qudian and Perella Weinberg

0.65

Correlation Coefficient

Qudian  Perella Weinberg

Poor diversification

The 3 months correlation between Qudian and Perella is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Perella Weinberg Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perella Weinberg Partners 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 Perella Weinberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perella Weinberg Partners has no effect on the direction of Qudian i.e., Qudian and Perella Weinberg go up and down completely randomly.

Pair Corralation between Qudian and Perella Weinberg

Allowing for the 90-day total investment horizon Qudian Inc is expected to under-perform the Perella Weinberg. In addition to that, Qudian is 1.92 times more volatile than Perella Weinberg Partners. It trades about -0.13 of its total potential returns per unit of risk. Perella Weinberg Partners is currently generating about -0.17 per unit of volatility. If you would invest  2,515  in Perella Weinberg Partners on October 9, 2024 and sell it today you would lose (175.00) from holding Perella Weinberg Partners or give up 6.96% of portfolio value over 90 days.

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

Qudian Inc  vs.  Perella Weinberg Partners

Qudian Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qudian Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Qudian exhibited solid returns over the last few months and may actually be approaching a breakup point.

Perella Weinberg Partners

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perella Weinberg Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Perella Weinberg reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qudian and Perella Weinberg

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

The idea behind Qudian Inc and Perella Weinberg Partners 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.