Correlation Between 360 Finance and Yirendai
Can any of the company-specific risk be diversified away by investing in both 360 Finance and Yirendai 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 360 Finance and Yirendai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 360 Finance and Yirendai, you can compare the effects of market volatilities on 360 Finance and Yirendai 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 360 Finance with a short position of Yirendai. Check out your portfolio center. Please also check ongoing floating volatility patterns of 360 Finance and Yirendai.
Diversification Opportunities for 360 Finance and Yirendai
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 360 and Yirendai is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding 360 Finance and Yirendai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yirendai and 360 Finance 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 360 Finance are associated (or correlated) with Yirendai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yirendai has no effect on the direction of 360 Finance i.e., 360 Finance and Yirendai go up and down completely randomly.
Pair Corralation between 360 Finance and Yirendai
Given the investment horizon of 90 days 360 Finance is expected to generate 1.25 times less return on investment than Yirendai. But when comparing it to its historical volatility, 360 Finance is 1.52 times less risky than Yirendai. It trades about 0.05 of its potential returns per unit of risk. Yirendai is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 306.00 in Yirendai on August 27, 2024 and sell it today you would earn a total of 179.00 from holding Yirendai or generate 58.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
360 Finance vs. Yirendai
Performance |
| Timeline |
| 360 Finance |
| Yirendai |
360 Finance and Yirendai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 360 Finance and Yirendai
The main advantage of trading using opposite 360 Finance and Yirendai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 360 Finance position performs unexpectedly, Yirendai 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 Yirendai will offset losses from the drop in Yirendai's long position.| 360 Finance vs. SLM Corp | 360 Finance vs. Orix Corp Ads | 360 Finance vs. FirstCash | 360 Finance vs. Medallion Financial Corp |
| Yirendai vs. Lexinfintech Holdings | Yirendai vs. FinVolution Group | Yirendai vs. 360 Finance | Yirendai vs. Navient Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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