Correlation Between FinVolution and Bitwise Funds

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

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

Diversification Opportunities for FinVolution and Bitwise Funds

0.5

Correlation Coefficient

FinVolution  Bitwise Funds

Very weak diversification

The 3 months correlation between FinVolution and Bitwise is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Bitwise Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise Funds Trust 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 Bitwise Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise Funds Trust has no effect on the direction of FinVolution i.e., FinVolution and Bitwise Funds go up and down completely randomly.

Pair Corralation between FinVolution and Bitwise Funds

Given the investment horizon of 90 days FinVolution is expected to generate 2.68 times less return on investment than Bitwise Funds. But when comparing it to its historical volatility, FinVolution Group is 1.99 times less risky than Bitwise Funds. It trades about 0.04 of its potential returns per unit of risk. Bitwise Funds Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,345  in Bitwise Funds Trust on October 5, 2024 and sell it today you would earn a total of  1,361  from holding Bitwise Funds Trust or generate 58.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	63.84%
Values	Daily Returns

FinVolution Group  vs.  Bitwise Funds Trust

FinVolution Group

Risk-Adjusted Performance

1 of 100

Very 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.

Bitwise Funds Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bitwise Funds Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Bitwise Funds demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FinVolution and Bitwise Funds

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

The idea behind FinVolution Group and Bitwise Funds Trust 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.