Correlation Between Qudian and Xp

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

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

Diversification Opportunities for Qudian and Xp

0.3

Correlation Coefficient

Qudian  Xp

Weak diversification

The 3 months correlation between Qudian and Xp is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Xp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Inc 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 Xp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Inc has no effect on the direction of Qudian i.e., Qudian and Xp go up and down completely randomly.

Pair Corralation between Qudian and Xp

Allowing for the 90-day total investment horizon Qudian is expected to generate 33.27 times less return on investment than Xp. In addition to that, Qudian is 1.27 times more volatile than Xp Inc. It trades about 0.0 of its total potential returns per unit of risk. Xp Inc is currently generating about 0.14 per unit of volatility. If you would invest  1,218  in Xp Inc on December 25, 2024 and sell it today you would earn a total of  256.00  from holding Xp Inc or generate 21.02% return on investment over 90 days.

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

Qudian Inc  vs.  Xp Inc

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

Xp Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xp Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Xp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qudian and Xp

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

The idea behind Qudian Inc and Xp Inc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.