Correlation Between Qudian and China Lending

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

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

Diversification Opportunities for Qudian and China Lending

0.0

Correlation Coefficient

Qudian  China Lending

Pay attention - limited upside

The 3 months correlation between Qudian and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and China Lending Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Lending Corp 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 China Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Lending Corp has no effect on the direction of Qudian i.e., Qudian and China Lending go up and down completely randomly.

Pair Corralation between Qudian and China Lending

If you would invest (100.00) in China Lending Corp on December 28, 2024 and sell it today you would earn a total of  100.00  from holding China Lending Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Qudian Inc  vs.  China Lending Corp

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

China Lending Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Lending Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, China Lending is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Qudian and China Lending

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

The idea behind Qudian Inc and China Lending Corp 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.