Correlation Between FinVolution and Longshine Technology

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

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

Diversification Opportunities for FinVolution and Longshine Technology

0.25

Correlation Coefficient

FinVolution  Longshine Technology

Modest diversification

The 3 months correlation between FinVolution and Longshine is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Longshine Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longshine Technology 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 Longshine Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longshine Technology has no effect on the direction of FinVolution i.e., FinVolution and Longshine Technology go up and down completely randomly.

Pair Corralation between FinVolution and Longshine Technology

Given the investment horizon of 90 days FinVolution Group is expected to generate 0.56 times more return on investment than Longshine Technology. However, FinVolution Group is 1.78 times less risky than Longshine Technology. It trades about -0.05 of its potential returns per unit of risk. Longshine Technology Co is currently generating about -0.3 per unit of risk. If you would invest  688.00  in FinVolution Group on October 5, 2024 and sell it today you would lose (10.00) from holding FinVolution Group or give up 1.45% 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.  Longshine Technology Co

FinVolution Group

Risk-Adjusted Performance

1 of 100

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.

Longshine Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Longshine Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with FinVolution and Longshine Technology

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

The idea behind FinVolution Group and Longshine Technology 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.