Correlation Between FinVolution and Columbia Global

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

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

Diversification Opportunities for FinVolution and Columbia Global

0.73

Correlation Coefficient

FinVolution  Columbia Global

Poor diversification

The 3 months correlation between FinVolution and Columbia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Columbia Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Tech 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 Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Tech has no effect on the direction of FinVolution i.e., FinVolution and Columbia Global go up and down completely randomly.

Pair Corralation between FinVolution and Columbia Global

Given the investment horizon of 90 days FinVolution Group is expected to generate 1.57 times more return on investment than Columbia Global. However, FinVolution is 1.57 times more volatile than Columbia Global Technology. It trades about 0.15 of its potential returns per unit of risk. Columbia Global Technology is currently generating about 0.05 per unit of risk. If you would invest  629.00  in FinVolution Group on October 22, 2024 and sell it today you would earn a total of  73.00  from holding FinVolution Group or generate 11.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.5%
Values	Daily Returns

FinVolution Group  vs.  Columbia Global Technology

FinVolution Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, FinVolution showed solid returns over the last few months and may actually be approaching a breakup point.

Columbia Global Tech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FinVolution and Columbia Global

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

The idea behind FinVolution Group and Columbia Global Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.