Correlation Between Qudian and Sentage Holdings

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

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

Diversification Opportunities for Qudian and Sentage Holdings

0.11

Correlation Coefficient

Qudian  Sentage Holdings

Average diversification

The 3 months correlation between Qudian and Sentage is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Sentage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentage Holdings 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 Sentage Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentage Holdings has no effect on the direction of Qudian i.e., Qudian and Sentage Holdings go up and down completely randomly.

Pair Corralation between Qudian and Sentage Holdings

Allowing for the 90-day total investment horizon Qudian Inc is expected to under-perform the Sentage Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Qudian Inc is 1.56 times less risky than Sentage Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The Sentage Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  191.00  in Sentage Holdings on December 28, 2024 and sell it today you would lose (12.00) from holding Sentage Holdings or give up 6.28% of portfolio value over 90 days.

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

Qudian Inc  vs.  Sentage Holdings

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.

Sentage Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Qudian and Sentage Holdings

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

The idea behind Qudian Inc and Sentage Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.