Correlation Between Qudian and FinVolution

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

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

Diversification Opportunities for Qudian and FinVolution

0.4

Correlation Coefficient

Qudian  FinVolution

Very weak diversification

The 3 months correlation between Qudian and FinVolution is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and FinVolution Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinVolution Group 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 FinVolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FinVolution Group has no effect on the direction of Qudian i.e., Qudian and FinVolution go up and down completely randomly.

Pair Corralation between Qudian and FinVolution

Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 1.16 times more return on investment than FinVolution. However, Qudian is 1.16 times more volatile than FinVolution Group. It trades about 0.21 of its potential returns per unit of risk. FinVolution Group is currently generating about 0.0 per unit of risk. If you would invest  281.00  in Qudian Inc on May 5, 2025 and sell it today you would earn a total of  114.00  from holding Qudian Inc or generate 40.57% return on investment over 90 days.

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

Qudian Inc  vs.  FinVolution Group

Qudian Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qudian Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Qudian exhibited solid returns over the last few months and may actually be approaching a breakup point.

FinVolution Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days FinVolution Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, FinVolution is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Qudian and FinVolution

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

The idea behind Qudian Inc and FinVolution Group 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.