Correlation Between SLM Corp and Jiayin

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

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

Diversification Opportunities for SLM Corp and Jiayin

-0.48

Correlation Coefficient

SLM Corp  Jiayin

Very good diversification

The 3 months correlation between SLM and Jiayin is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp and Jiayin Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiayin Group and SLM Corp 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 SLM Corp 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 SLM Corp i.e., SLM Corp and Jiayin go up and down completely randomly.

Pair Corralation between SLM Corp and Jiayin

Considering the 90-day investment horizon SLM Corp is expected to generate 2.0 times less return on investment than Jiayin. But when comparing it to its historical volatility, SLM Corp is 2.08 times less risky than Jiayin. It trades about 0.06 of its potential returns per unit of risk. Jiayin Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  286.00  in Jiayin Group on October 3, 2024 and sell it today you would earn a total of  351.00  from holding Jiayin Group or generate 122.73% return on investment over 90 days.

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

SLM Corp  vs.  Jiayin Group

SLM Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLM Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, SLM Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with SLM Corp and Jiayin

The main advantage of trading using opposite SLM Corp and Jiayin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp 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 SLM Corp 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.