Correlation Between FinVolution and Bath Body

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

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

Diversification Opportunities for FinVolution and Bath Body

0.74

Correlation Coefficient

FinVolution  Bath Body

Poor diversification

The 3 months correlation between FinVolution and Bath is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Bath Body Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bath Body Works and FinVolution 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 FinVolution Group are associated (or correlated) with Bath Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bath Body Works has no effect on the direction of FinVolution i.e., FinVolution and Bath Body go up and down completely randomly.

Pair Corralation between FinVolution and Bath Body

Given the investment horizon of 90 days FinVolution is expected to generate 12.85 times less return on investment than Bath Body. But when comparing it to its historical volatility, FinVolution Group is 1.36 times less risky than Bath Body. It trades about 0.01 of its potential returns per unit of risk. Bath Body Works is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,945  in Bath Body Works on October 5, 2024 and sell it today you would earn a total of  830.00  from holding Bath Body Works or generate 28.18% return on investment over 90 days.

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

FinVolution Group  vs.  Bath Body Works

FinVolution Group

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, FinVolution is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Bath Body Works

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with FinVolution and Bath Body

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

The idea behind FinVolution Group and Bath Body Works 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.