Correlation Between Jiayin and International Equity

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

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

Diversification Opportunities for Jiayin and International Equity

0.31

Correlation Coefficient

Jiayin  International Equity

Weak diversification

The 3 months correlation between Jiayin and International is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and International Equity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Jiayin i.e., Jiayin and International Equity go up and down completely randomly.

Pair Corralation between Jiayin and International Equity

Given the investment horizon of 90 days Jiayin Group is expected to generate 0.81 times more return on investment than International Equity. However, Jiayin Group is 1.23 times less risky than International Equity. It trades about 0.03 of its potential returns per unit of risk. International Equity Portfolio is currently generating about -0.18 per unit of risk. If you would invest  640.00  in Jiayin Group on October 6, 2024 and sell it today you would earn a total of  13.00  from holding Jiayin Group or generate 2.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Jiayin Group  vs.  International Equity Portfolio

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.

International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Equity Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Jiayin and International Equity

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

The idea behind Jiayin Group and International Equity Portfolio 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.