Correlation Between Oriental Culture and Jiayin

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

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

Diversification Opportunities for Oriental Culture and Jiayin

0.53

Correlation Coefficient

Oriental Culture  Jiayin

Very weak diversification

The 3 months correlation between Oriental and Jiayin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Culture Holding and Jiayin Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiayin Group and Oriental Culture 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 Oriental Culture Holding are associated (or correlated) with Jiayin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiayin Group has no effect on the direction of Oriental Culture i.e., Oriental Culture and Jiayin go up and down completely randomly.

Pair Corralation between Oriental Culture and Jiayin

Considering the 90-day investment horizon Oriental Culture is expected to generate 1.6 times less return on investment than Jiayin. But when comparing it to its historical volatility, Oriental Culture Holding is 1.2 times less risky than Jiayin. It trades about 0.16 of its potential returns per unit of risk. Jiayin Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  637.00  in Jiayin Group on December 29, 2024 and sell it today you would earn a total of  847.00  from holding Jiayin Group or generate 132.97% return on investment over 90 days.

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

Oriental Culture Holding  vs.  Jiayin Group

Oriental Culture Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oriental Culture Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Oriental Culture reported solid returns over the last few months and may actually be approaching a breakup point.

Jiayin Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jiayin Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Jiayin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oriental Culture and Jiayin

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

The idea behind Oriental Culture Holding and Jiayin 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.