Correlation Between FinVolution and Pandora A/S

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

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

Diversification Opportunities for FinVolution and Pandora A/S

0.69

Correlation Coefficient

FinVolution  Pandora A/S

Poor diversification

The 3 months correlation between FinVolution and Pandora is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora A/S 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 Pandora A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora A/S has no effect on the direction of FinVolution i.e., FinVolution and Pandora A/S go up and down completely randomly.

Pair Corralation between FinVolution and Pandora A/S

Given the investment horizon of 90 days FinVolution Group is expected to under-perform the Pandora A/S. In addition to that, FinVolution is 1.27 times more volatile than Pandora AS. It trades about -0.02 of its total potential returns per unit of risk. Pandora AS is currently generating about 0.2 per unit of volatility. If you would invest  14,130  in Pandora AS on October 4, 2024 and sell it today you would earn a total of  3,565  from holding Pandora AS or generate 25.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

FinVolution Group  vs.  Pandora AS

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 recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pandora A/S

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pandora AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pandora A/S reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FinVolution and Pandora A/S

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

The idea behind FinVolution Group and Pandora AS 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.