Correlation Between Qudian and RAYTHEON

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

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

Diversification Opportunities for Qudian and RAYTHEON

-0.02

Correlation Coefficient

Qudian  RAYTHEON

Good diversification

The 3 months correlation between Qudian and RAYTHEON is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and RAYTHEON TECHNOLOGIES PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAYTHEON TECHNOLOGIES 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 RAYTHEON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAYTHEON TECHNOLOGIES has no effect on the direction of Qudian i.e., Qudian and RAYTHEON go up and down completely randomly.

Pair Corralation between Qudian and RAYTHEON

Allowing for the 90-day total investment horizon Qudian Inc is expected to under-perform the RAYTHEON. In addition to that, Qudian is 3.54 times more volatile than RAYTHEON TECHNOLOGIES PORATION. It trades about -0.03 of its total potential returns per unit of risk. RAYTHEON TECHNOLOGIES PORATION is currently generating about 0.04 per unit of volatility. If you would invest  6,067  in RAYTHEON TECHNOLOGIES PORATION on December 28, 2024 and sell it today you would earn a total of  112.00  from holding RAYTHEON TECHNOLOGIES PORATION or generate 1.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.25%
Values	Daily Returns

Qudian Inc  vs.  RAYTHEON TECHNOLOGIES PORATION

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.

RAYTHEON TECHNOLOGIES

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RAYTHEON TECHNOLOGIES PORATION are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, RAYTHEON is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qudian and RAYTHEON

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

The idea behind Qudian Inc and RAYTHEON TECHNOLOGIES PORATION 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.