Correlation Between Wah Fu and Jiayin

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

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

Diversification Opportunities for Wah Fu and Jiayin

0.53

Correlation Coefficient

Wah Fu  Jiayin

Very weak diversification

The 3 months correlation between Wah and Jiayin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Wah Fu Education and Jiayin Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiayin Group and Wah Fu 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 Wah Fu Education 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 Wah Fu i.e., Wah Fu and Jiayin go up and down completely randomly.

Pair Corralation between Wah Fu and Jiayin

Given the investment horizon of 90 days Wah Fu Education is expected to generate 1.69 times more return on investment than Jiayin. However, Wah Fu is 1.69 times more volatile than Jiayin Group. It trades about 0.14 of its potential returns per unit of risk. Jiayin Group is currently generating about 0.16 per unit of risk. If you would invest  169.00  in Wah Fu Education on November 29, 2024 and sell it today you would earn a total of  116.00  from holding Wah Fu Education or generate 68.64% return on investment over 90 days.

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

Wah Fu Education  vs.  Jiayin Group

Wah Fu Education

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wah Fu Education are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Wah Fu unveiled solid returns over the last few months and may actually be approaching a breakup point.

Jiayin Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiayin Group are ranked lower than 12 (%) 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 Wah Fu and Jiayin

The main advantage of trading using opposite Wah Fu and Jiayin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Fu 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 Wah Fu Education 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.