Correlation Between Associated Capital and Qudian

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

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

Diversification Opportunities for Associated Capital and Qudian

-0.48

Correlation Coefficient

Associated Capital  Qudian

Very good diversification

The 3 months correlation between Associated and Qudian is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Qudian Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qudian Inc and Associated Capital 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 Associated Capital Group are associated (or correlated) with Qudian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qudian Inc has no effect on the direction of Associated Capital i.e., Associated Capital and Qudian go up and down completely randomly.

Pair Corralation between Associated Capital and Qudian

Allowing for the 90-day total investment horizon Associated Capital is expected to generate 2.66 times less return on investment than Qudian. But when comparing it to its historical volatility, Associated Capital Group is 3.59 times less risky than Qudian. It trades about 0.02 of its potential returns per unit of risk. Qudian Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Qudian Inc on January 31, 2024 and sell it today you would earn a total of  0.00  from holding Qudian Inc or generate 0.0% return on investment over 90 days.

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

Associated Capital Group  vs.  Qudian Inc

Associated Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associated Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Associated Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Qudian Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qudian Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Qudian exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Associated Capital and Qudian

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

The idea behind Associated Capital Group and Qudian 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.