Correlation Between Jiayin and UMF

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

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

Diversification Opportunities for Jiayin and UMF

0.3

Correlation Coefficient

Jiayin  UMF

Weak diversification

The 3 months correlation between Jiayin and UMF is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and UMF Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMF Group 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 UMF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMF Group has no effect on the direction of Jiayin i.e., Jiayin and UMF go up and down completely randomly.

Pair Corralation between Jiayin and UMF

Given the investment horizon of 90 days Jiayin is expected to generate 25.63 times less return on investment than UMF. But when comparing it to its historical volatility, Jiayin Group is 11.7 times less risky than UMF. It trades about 0.07 of its potential returns per unit of risk. UMF Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.13  in UMF Group on October 21, 2024 and sell it today you would earn a total of  1.37  from holding UMF Group or generate 1053.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	24.4%
Values	Daily Returns

Jiayin Group  vs.  UMF Group

Jiayin Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiayin Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Jiayin may actually be approaching a critical reversion point that can send shares even higher in February 2025.

UMF Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UMF Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, UMF is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Jiayin and UMF

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

The idea behind Jiayin Group and UMF Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.