Correlation Between Jiayin and Incitec Pivot

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

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

Diversification Opportunities for Jiayin and Incitec Pivot

0.09

Correlation Coefficient

Jiayin  Incitec Pivot

Significant diversification

The 3 months correlation between Jiayin and Incitec is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and Incitec Pivot Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incitec Pivot 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 Incitec Pivot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incitec Pivot has no effect on the direction of Jiayin i.e., Jiayin and Incitec Pivot go up and down completely randomly.

Pair Corralation between Jiayin and Incitec Pivot

Given the investment horizon of 90 days Jiayin is expected to generate 5.77 times less return on investment than Incitec Pivot. But when comparing it to its historical volatility, Jiayin Group is 1.05 times less risky than Incitec Pivot. It trades about 0.04 of its potential returns per unit of risk. Incitec Pivot Ltd is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  196.00  in Incitec Pivot Ltd on October 5, 2024 and sell it today you would earn a total of  25.00  from holding Incitec Pivot Ltd or generate 12.76% 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.  Incitec Pivot 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.

Incitec Pivot

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Incitec Pivot Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Incitec Pivot showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiayin and Incitec Pivot

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

The idea behind Jiayin Group and Incitec Pivot 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.