Correlation Between FinVolution and Ab Value

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

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

Diversification Opportunities for FinVolution and Ab Value

-0.38

Correlation Coefficient

FinVolution  Ab Value

Very good diversification

The 3 months correlation between FinVolution and ABVAX is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Ab Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Value Fund 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 Ab Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Value Fund has no effect on the direction of FinVolution i.e., FinVolution and Ab Value go up and down completely randomly.

Pair Corralation between FinVolution and Ab Value

Given the investment horizon of 90 days FinVolution Group is expected to generate 0.53 times more return on investment than Ab Value. However, FinVolution Group is 1.88 times less risky than Ab Value. It trades about -0.03 of its potential returns per unit of risk. Ab Value Fund is currently generating about -0.35 per unit of risk. If you would invest  686.00  in FinVolution Group on October 4, 2024 and sell it today you would lose (7.00) from holding FinVolution Group or give up 1.02% of portfolio value over 90 days.

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

FinVolution Group  vs.  Ab Value Fund

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.

Ab Value Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with FinVolution and Ab Value

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

The idea behind FinVolution Group and Ab Value Fund 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.