Correlation Between Jiayin and SK Growth

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

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

Diversification Opportunities for Jiayin and SK Growth

0.03

Correlation Coefficient

Jiayin  SK Growth

Significant diversification

The 3 months correlation between Jiayin and SKGRU is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and SK Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Growth Opportunities 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 SK Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Growth Opportunities has no effect on the direction of Jiayin i.e., Jiayin and SK Growth go up and down completely randomly.

Pair Corralation between Jiayin and SK Growth

Given the investment horizon of 90 days Jiayin is expected to generate 126.0 times less return on investment than SK Growth. But when comparing it to its historical volatility, Jiayin Group is 45.71 times less risky than SK Growth. It trades about 0.07 of its potential returns per unit of risk. SK Growth Opportunities is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,034  in SK Growth Opportunities on October 6, 2024 and sell it today you would earn a total of  133.00  from holding SK Growth Opportunities or generate 12.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	25.47%
Values	Daily Returns

Jiayin Group  vs.  SK Growth Opportunities

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.

SK Growth Opportunities

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days SK Growth Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, SK Growth unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiayin and SK Growth

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

The idea behind Jiayin Group and SK Growth Opportunities 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.