Correlation Between Jiayin and Baidu

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

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

Diversification Opportunities for Jiayin and Baidu

0.81

Correlation Coefficient

Jiayin  Baidu

Very poor diversification

The 3 months correlation between Jiayin and Baidu is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and Baidu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baidu Inc and Jiayin 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 Jiayin Group are associated (or correlated) with Baidu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baidu Inc has no effect on the direction of Jiayin i.e., Jiayin and Baidu go up and down completely randomly.

Pair Corralation between Jiayin and Baidu

Given the investment horizon of 90 days Jiayin Group is expected to generate 1.62 times more return on investment than Baidu. However, Jiayin is 1.62 times more volatile than Baidu Inc. It trades about 0.06 of its potential returns per unit of risk. Baidu Inc is currently generating about -0.02 per unit of risk. If you would invest  258.00  in Jiayin Group on September 30, 2024 and sell it today you would earn a total of  375.00  from holding Jiayin Group or generate 145.35% return on investment over 90 days.

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

Jiayin Group  vs.  Baidu Inc

Jiayin Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiayin Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Jiayin is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Baidu Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baidu Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Jiayin and Baidu

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

The idea behind Jiayin Group and Baidu 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.

Check out your portfolio center.

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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.