Correlation Between Qudian and SWK Holdings

Can any of the company-specific risk be diversified away by investing in both Qudian and SWK 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 SWK 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 SWK Holdings Corp, you can compare the effects of market volatilities on Qudian and SWK 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 SWK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and SWK Holdings.

Diversification Opportunities for Qudian and SWK Holdings

-0.53

Correlation Coefficient

Qudian  SWK Holdings

Excellent diversification

The 3 months correlation between Qudian and SWK is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and SWK Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK Holdings 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 SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings Corp has no effect on the direction of Qudian i.e., Qudian and SWK Holdings go up and down completely randomly.

Pair Corralation between Qudian and SWK Holdings

Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 2.57 times more return on investment than SWK Holdings. However, Qudian is 2.57 times more volatile than SWK Holdings Corp. It trades about 0.04 of its potential returns per unit of risk. SWK Holdings Corp is currently generating about -0.01 per unit of risk. If you would invest  215.00  in Qudian Inc on October 9, 2024 and sell it today you would earn a total of  61.00  from holding Qudian Inc or generate 28.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Qudian Inc  vs.  SWK Holdings Corp

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.

SWK Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SWK Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, SWK Holdings is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Qudian and SWK Holdings

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

The idea behind Qudian Inc and SWK Holdings 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.