Correlation Between Jiayin and Converge Technology

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

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

Diversification Opportunities for Jiayin and Converge Technology

0.77

Correlation Coefficient

Jiayin  Converge Technology

Poor diversification

The 3 months correlation between Jiayin and Converge is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and Converge Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Technology 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 Converge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Technology has no effect on the direction of Jiayin i.e., Jiayin and Converge Technology go up and down completely randomly.

Pair Corralation between Jiayin and Converge Technology

Given the investment horizon of 90 days Jiayin Group is expected to generate 1.55 times more return on investment than Converge Technology. However, Jiayin is 1.55 times more volatile than Converge Technology Solutions. It trades about 0.05 of its potential returns per unit of risk. Converge Technology Solutions is currently generating about -0.05 per unit of risk. If you would invest  644.00  in Jiayin Group on October 5, 2024 and sell it today you would earn a total of  12.00  from holding Jiayin Group or generate 1.86% return on investment over 90 days.

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

Jiayin Group  vs.  Converge Technology Solutions

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 fragile performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Converge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jiayin and Converge Technology

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

The idea behind Jiayin Group and Converge Technology Solutions 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.