Correlation Between Jiayin and PGIM Large

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

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

Diversification Opportunities for Jiayin and PGIM Large

-0.66

Correlation Coefficient

Jiayin  PGIM Large

Excellent diversification

The 3 months correlation between Jiayin and PGIM is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and PGIM Large Cap Buffer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Large Cap 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 PGIM Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Large Cap has no effect on the direction of Jiayin i.e., Jiayin and PGIM Large go up and down completely randomly.

Pair Corralation between Jiayin and PGIM Large

Given the investment horizon of 90 days Jiayin Group is expected to under-perform the PGIM Large. In addition to that, Jiayin is 12.45 times more volatile than PGIM Large Cap Buffer. It trades about -0.07 of its total potential returns per unit of risk. PGIM Large Cap Buffer is currently generating about 0.15 per unit of volatility. If you would invest  2,713  in PGIM Large Cap Buffer on October 5, 2024 and sell it today you would earn a total of  71.40  from holding PGIM Large Cap Buffer or generate 2.63% return on investment over 90 days.

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

Jiayin Group  vs.  PGIM Large Cap Buffer

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.

PGIM Large Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Large Cap Buffer are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PGIM Large is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Jiayin and PGIM Large

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

The idea behind Jiayin Group and PGIM Large Cap Buffer 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.