Correlation Between FinVolution and Bavarian Nordic

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

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

Diversification Opportunities for FinVolution and Bavarian Nordic

-0.4

Correlation Coefficient

FinVolution  Bavarian Nordic

Very good diversification

The 3 months correlation between FinVolution and Bavarian is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Bavarian Nordic AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bavarian Nordic AS 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 Bavarian Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bavarian Nordic AS has no effect on the direction of FinVolution i.e., FinVolution and Bavarian Nordic go up and down completely randomly.

Pair Corralation between FinVolution and Bavarian Nordic

Given the investment horizon of 90 days FinVolution Group is expected to generate 0.74 times more return on investment than Bavarian Nordic. However, FinVolution Group is 1.34 times less risky than Bavarian Nordic. It trades about -0.04 of its potential returns per unit of risk. Bavarian Nordic AS is currently generating about -0.07 per unit of risk. If you would invest  688.00  in FinVolution Group on October 5, 2024 and sell it today you would lose (9.00) from holding FinVolution Group or give up 1.31% of portfolio value over 90 days.

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

FinVolution Group  vs.  Bavarian Nordic AS

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.

Bavarian Nordic AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with FinVolution and Bavarian Nordic

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

The idea behind FinVolution Group and Bavarian Nordic 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.