Correlation Between Qudian and X Financial

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

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

Diversification Opportunities for Qudian and X Financial

-0.12

Correlation Coefficient

Qudian  X Financial

Good diversification

The 3 months correlation between Qudian and XYF is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and X Financial Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Financial Class 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 X Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Financial Class has no effect on the direction of Qudian i.e., Qudian and X Financial go up and down completely randomly.

Pair Corralation between Qudian and X Financial

Allowing for the 90-day total investment horizon Qudian Inc is expected to under-perform the X Financial. But the stock apears to be less risky and, when comparing its historical volatility, Qudian Inc is 1.49 times less risky than X Financial. The stock trades about -0.03 of its potential returns per unit of risk. The X Financial Class is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  826.00  in X Financial Class on December 26, 2024 and sell it today you would earn a total of  705.00  from holding X Financial Class or generate 85.35% return on investment over 90 days.

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

Qudian Inc  vs.  X Financial Class

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.

X Financial Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qudian and X Financial

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

The idea behind Qudian Inc and X Financial Class 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.