Correlation Between FinVolution and Sea Sonic

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

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

Diversification Opportunities for FinVolution and Sea Sonic

0.43

Correlation Coefficient

FinVolution  Sea Sonic

Very weak diversification

The 3 months correlation between FinVolution and Sea is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Sea Sonic Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Sonic Electronics 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 Sea Sonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Sonic Electronics has no effect on the direction of FinVolution i.e., FinVolution and Sea Sonic go up and down completely randomly.

Pair Corralation between FinVolution and Sea Sonic

Given the investment horizon of 90 days FinVolution is expected to generate 1.04 times less return on investment than Sea Sonic. But when comparing it to its historical volatility, FinVolution Group is 1.41 times less risky than Sea Sonic. It trades about 0.13 of its potential returns per unit of risk. Sea Sonic Electronics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,300  in Sea Sonic Electronics on October 6, 2024 and sell it today you would earn a total of  690.00  from holding Sea Sonic Electronics or generate 10.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.18%
Values	Daily Returns

FinVolution Group  vs.  Sea Sonic Electronics

FinVolution Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 2 (%) 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.

Sea Sonic Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FinVolution and Sea Sonic

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

The idea behind FinVolution Group and Sea Sonic Electronics 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.