Correlation Between FinVolution and AXA SA

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

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

Diversification Opportunities for FinVolution and AXA SA

-0.57

Correlation Coefficient

FinVolution  AXA SA

Excellent diversification

The 3 months correlation between FinVolution and AXA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA 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 AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of FinVolution i.e., FinVolution and AXA SA go up and down completely randomly.

Pair Corralation between FinVolution and AXA SA

Given the investment horizon of 90 days FinVolution Group is expected to generate 1.42 times more return on investment than AXA SA. However, FinVolution is 1.42 times more volatile than AXA SA. It trades about 0.04 of its potential returns per unit of risk. AXA SA is currently generating about 0.05 per unit of risk. If you would invest  496.00  in FinVolution Group on October 4, 2024 and sell it today you would earn a total of  183.00  from holding FinVolution Group or generate 36.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.8%
Values	Daily Returns

FinVolution Group  vs.  AXA SA

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.

AXA SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AXA SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AXA SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FinVolution and AXA SA

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

The idea behind FinVolution Group and AXA SA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.