Correlation Between Jiayin and RENTOKIL INITIAL

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

By analyzing existing cross correlation between Jiayin Group and RENTOKIL INITIAL ADR5, you can compare the effects of market volatilities on Jiayin and RENTOKIL INITIAL 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 RENTOKIL INITIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiayin and RENTOKIL INITIAL.

Diversification Opportunities for Jiayin and RENTOKIL INITIAL

-0.44

Correlation Coefficient

Jiayin  RENTOKIL INITIAL

Very good diversification

The 3 months correlation between Jiayin and RENTOKIL is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and RENTOKIL INITIAL ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENTOKIL INITIAL ADR5 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 RENTOKIL INITIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENTOKIL INITIAL ADR5 has no effect on the direction of Jiayin i.e., Jiayin and RENTOKIL INITIAL go up and down completely randomly.

Pair Corralation between Jiayin and RENTOKIL INITIAL

Given the investment horizon of 90 days Jiayin Group is expected to under-perform the RENTOKIL INITIAL. In addition to that, Jiayin is 1.1 times more volatile than RENTOKIL INITIAL ADR5. It trades about -0.05 of its total potential returns per unit of risk. RENTOKIL INITIAL ADR5 is currently generating about 0.07 per unit of volatility. If you would invest  2,160  in RENTOKIL INITIAL ADR5 on October 4, 2024 and sell it today you would earn a total of  260.00  from holding RENTOKIL INITIAL ADR5 or generate 12.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Jiayin Group  vs.  RENTOKIL INITIAL ADR5

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 latest fragile performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

RENTOKIL INITIAL ADR5

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RENTOKIL INITIAL ADR5 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RENTOKIL INITIAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiayin and RENTOKIL INITIAL

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

The idea behind Jiayin Group and RENTOKIL INITIAL ADR5 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.