Correlation Between Jiayin and Canadian Utilities

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

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

Diversification Opportunities for Jiayin and Canadian Utilities

0.27

Correlation Coefficient

Jiayin  Canadian Utilities

Modest diversification

The 3 months correlation between Jiayin and Canadian is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and Canadian Utilities Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Jiayin i.e., Jiayin and Canadian Utilities go up and down completely randomly.

Pair Corralation between Jiayin and Canadian Utilities

Given the investment horizon of 90 days Jiayin Group is expected to generate 10.45 times more return on investment than Canadian Utilities. However, Jiayin is 10.45 times more volatile than Canadian Utilities Ltd. It trades about 0.05 of its potential returns per unit of risk. Canadian Utilities Ltd is currently generating about 0.39 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	Very Weak
Accuracy	95.0%
Values	Daily Returns

Jiayin Group  vs.  Canadian Utilities Ltd

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.

Canadian Utilities

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Utilities Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Canadian Utilities is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Jiayin and Canadian Utilities

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

The idea behind Jiayin Group and Canadian Utilities Ltd 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.