Correlation Between Yirendai and X Financial
Can any of the company-specific risk be diversified away by investing in both Yirendai and X Financial 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 X Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yirendai and X Financial Class, you can compare the effects of market volatilities on Yirendai and X Financial 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 X Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yirendai and X Financial.
Diversification Opportunities for Yirendai and X Financial
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yirendai and XYF is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Yirendai and X Financial Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Financial Class 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 X Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Financial Class has no effect on the direction of Yirendai i.e., Yirendai and X Financial go up and down completely randomly.
Pair Corralation between Yirendai and X Financial
Considering the 90-day investment horizon Yirendai is expected to generate 0.95 times more return on investment than X Financial. However, Yirendai is 1.05 times less risky than X Financial. It trades about 0.12 of its potential returns per unit of risk. X Financial Class is currently generating about 0.01 per unit of risk. If you would invest 490.00 in Yirendai on February 5, 2024 and sell it today you would earn a total of 31.00 from holding Yirendai or generate 6.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Yirendai vs. X Financial Class
Performance |
Timeline |
Yirendai |
X Financial Class |
Yirendai and X Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yirendai and X Financial
The main advantage of trading using opposite Yirendai and X Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yirendai position performs unexpectedly, X Financial 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 X Financial will offset losses from the drop in X Financial's long position.Yirendai vs. Lexinfintech Holdings | Yirendai vs. FinVolution Group | Yirendai vs. 360 Finance | Yirendai vs. Navient Corp |
X Financial vs. LM Funding America | X Financial vs. Dunxin Financial Holdings | X Financial vs. Nisun International Enterprise | X Financial vs. Qudian Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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