Correlation Between Jiayin and East Japan

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

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

Diversification Opportunities for Jiayin and East Japan

0.08

Correlation Coefficient

Jiayin  East Japan

Significant diversification

The 3 months correlation between Jiayin and East is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and East Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Japan Railway 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 East Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Japan Railway has no effect on the direction of Jiayin i.e., Jiayin and East Japan go up and down completely randomly.

Pair Corralation between Jiayin and East Japan

Given the investment horizon of 90 days Jiayin Group is expected to generate 1.91 times more return on investment than East Japan. However, Jiayin is 1.91 times more volatile than East Japan Railway. It trades about 0.06 of its potential returns per unit of risk. East Japan Railway is currently generating about 0.0 per unit of risk. If you would invest  437.00  in Jiayin Group on October 5, 2024 and sell it today you would earn a total of  219.00  from holding Jiayin Group or generate 50.11% return on investment over 90 days.

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

Jiayin Group  vs.  East Japan Railway

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.

East Japan Railway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Japan Railway has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, East Japan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Jiayin and East Japan

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

The idea behind Jiayin Group and East Japan Railway 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.