Correlation Between Yirendai and Jianpu Technology

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

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

Diversification Opportunities for Yirendai and Jianpu Technology

0.0

Correlation Coefficient

Yirendai  Jianpu Technology

Pay attention - limited upside

The 3 months correlation between Yirendai and Jianpu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Yirendai and Jianpu Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jianpu Technology and Yirendai 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 Yirendai are associated (or correlated) with Jianpu Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jianpu Technology has no effect on the direction of Yirendai i.e., Yirendai and Jianpu Technology go up and down completely randomly.

Pair Corralation between Yirendai and Jianpu Technology

If you would invest  503.00  in Yirendai on November 29, 2024 and sell it today you would earn a total of  182.00  from holding Yirendai or generate 36.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Yirendai  vs.  Jianpu Technology

Yirendai

Risk-Adjusted Performance

Good

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

Jianpu Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jianpu Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Jianpu Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Yirendai and Jianpu Technology

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

The idea behind Yirendai and Jianpu Technology 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.