Correlation Between Qudian and GigCapital7 Corp

Can any of the company-specific risk be diversified away by investing in both Qudian and GigCapital7 Corp 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 GigCapital7 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qudian Inc and GigCapital7 Corp Class, you can compare the effects of market volatilities on Qudian and GigCapital7 Corp 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 GigCapital7 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and GigCapital7 Corp.

Diversification Opportunities for Qudian and GigCapital7 Corp

0.7

Correlation Coefficient

Qudian  GigCapital7 Corp

Poor diversification

The 3 months correlation between Qudian and GigCapital7 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and GigCapital7 Corp Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigCapital7 Corp 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 GigCapital7 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigCapital7 Corp Class has no effect on the direction of Qudian i.e., Qudian and GigCapital7 Corp go up and down completely randomly.

Pair Corralation between Qudian and GigCapital7 Corp

Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 0.26 times more return on investment than GigCapital7 Corp. However, Qudian Inc is 3.83 times less risky than GigCapital7 Corp. It trades about -0.03 of its potential returns per unit of risk. GigCapital7 Corp Class is currently generating about -0.21 per unit of risk. If you would invest  305.00  in Qudian Inc on September 27, 2024 and sell it today you would lose (14.00) from holding Qudian Inc or give up 4.59% of portfolio value over 90 days.

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

Qudian Inc  vs.  GigCapital7 Corp Class

Qudian Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qudian Inc are ranked lower than 9 (%) 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.

GigCapital7 Corp Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GigCapital7 Corp Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Qudian and GigCapital7 Corp

The main advantage of trading using opposite Qudian and GigCapital7 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian position performs unexpectedly, GigCapital7 Corp 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 GigCapital7 Corp will offset losses from the drop in GigCapital7 Corp's long position.

The idea behind Qudian Inc and GigCapital7 Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.