Correlation Between Qudian and SK Growth

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

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

Diversification Opportunities for Qudian and SK Growth

0.73

Correlation Coefficient

Qudian  SK Growth

Poor diversification

The 3 months correlation between Qudian and SKGR is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and SK Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Growth Opportunities 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 SK Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Growth Opportunities has no effect on the direction of Qudian i.e., Qudian and SK Growth go up and down completely randomly.

Pair Corralation between Qudian and SK Growth

Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 36.39 times more return on investment than SK Growth. However, Qudian is 36.39 times more volatile than SK Growth Opportunities. It trades about 0.03 of its potential returns per unit of risk. SK Growth Opportunities is currently generating about -0.13 per unit of risk. If you would invest  296.00  in Qudian Inc on October 23, 2024 and sell it today you would earn a total of  2.00  from holding Qudian Inc or generate 0.68% return on investment over 90 days.

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

Qudian Inc  vs.  SK Growth Opportunities

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 fragile fundamental indicators, Qudian exhibited solid returns over the last few months and may actually be approaching a breakup point.

SK Growth Opportunities

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SK Growth Opportunities are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, SK Growth is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Qudian and SK Growth

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

The idea behind Qudian Inc and SK Growth Opportunities 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.