Correlation Between Twilio and Jiayin

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

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

Diversification Opportunities for Twilio and Jiayin

-0.19

Correlation Coefficient

Twilio  Jiayin

Good diversification

The 3 months correlation between Twilio and Jiayin is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Twilio Inc and Jiayin Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiayin Group and Twilio 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 Twilio Inc 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 Twilio i.e., Twilio and Jiayin go up and down completely randomly.

Pair Corralation between Twilio and Jiayin

Given the investment horizon of 90 days Twilio Inc is expected to under-perform the Jiayin. But the stock apears to be less risky and, when comparing its historical volatility, Twilio Inc is 1.95 times less risky than Jiayin. The stock trades about -0.01 of its potential returns per unit of risk. The 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Twilio Inc  vs.  Jiayin Group

Twilio Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Twilio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Twilio is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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 Twilio and Jiayin

The main advantage of trading using opposite Twilio and Jiayin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twilio 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 Twilio Inc 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.