Correlation Between FinVolution and Baker Hughes

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

By analyzing existing cross correlation between FinVolution Group and Baker Hughes Co, you can compare the effects of market volatilities on FinVolution and Baker Hughes 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 Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinVolution and Baker Hughes.

Diversification Opportunities for FinVolution and Baker Hughes

0.29

Correlation Coefficient

FinVolution  Baker Hughes

Modest diversification

The 3 months correlation between FinVolution and Baker is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes 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 Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes has no effect on the direction of FinVolution i.e., FinVolution and Baker Hughes go up and down completely randomly.

Pair Corralation between FinVolution and Baker Hughes

Given the investment horizon of 90 days FinVolution Group is expected to generate 0.85 times more return on investment than Baker Hughes. However, FinVolution Group is 1.18 times less risky than Baker Hughes. It trades about -0.04 of its potential returns per unit of risk. Baker Hughes Co is currently generating about -0.18 per unit of risk. If you would invest  686.00  in FinVolution Group on October 4, 2024 and sell it today you would lose (8.00) from holding FinVolution Group or give up 1.17% of portfolio value over 90 days.

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

FinVolution Group  vs.  Baker Hughes Co

FinVolution Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FinVolution Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, FinVolution is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Baker Hughes

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Baker Hughes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FinVolution and Baker Hughes

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

The idea behind FinVolution Group and Baker Hughes Co 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.