Correlation Between Yelp and Jiayin

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

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

Diversification Opportunities for Yelp and Jiayin

0.1

Correlation Coefficient

Yelp  Jiayin

Average diversification

The 3 months correlation between Yelp and Jiayin is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Yelp Inc and Jiayin Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiayin Group and Yelp 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 Yelp 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 Yelp i.e., Yelp and Jiayin go up and down completely randomly.

Pair Corralation between Yelp and Jiayin

Given the investment horizon of 90 days Yelp is expected to generate 2.27 times less return on investment than Jiayin. But when comparing it to its historical volatility, Yelp Inc is 2.3 times less risky than Jiayin. It trades about 0.13 of its potential returns per unit of risk. Jiayin Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  509.00  in Jiayin Group on August 31, 2024 and sell it today you would earn a total of  151.00  from holding Jiayin Group or generate 29.67% return on investment over 90 days.

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

Yelp Inc  vs.  Jiayin Group

Yelp Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yelp Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Yelp reported solid returns over the last few months and may actually be approaching a breakup point.

Jiayin Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jiayin Group are ranked lower than 10 (%) 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 Yelp and Jiayin

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

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..