Correlation Between FinVolution and Santander Bank

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

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

Diversification Opportunities for FinVolution and Santander Bank

0.02

Correlation Coefficient

FinVolution  Santander Bank

Significant diversification

The 3 months correlation between FinVolution and Santander is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Santander Bank Polska in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santander Bank Polska 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 Santander Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santander Bank Polska has no effect on the direction of FinVolution i.e., FinVolution and Santander Bank go up and down completely randomly.

Pair Corralation between FinVolution and Santander Bank

Given the investment horizon of 90 days FinVolution Group is expected to under-perform the Santander Bank. But the stock apears to be less risky and, when comparing its historical volatility, FinVolution Group is 1.7 times less risky than Santander Bank. The stock trades about -0.03 of its potential returns per unit of risk. The Santander Bank Polska is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10,410  in Santander Bank Polska on October 4, 2024 and sell it today you would earn a total of  390.00  from holding Santander Bank Polska or generate 3.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

FinVolution Group  vs.  Santander Bank Polska

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.

Santander Bank Polska

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Santander Bank Polska are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Santander Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FinVolution and Santander Bank

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

The idea behind FinVolution Group and Santander Bank Polska 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..