Correlation Between FinVolution and LG DAX

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

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

Diversification Opportunities for FinVolution and LG DAX

-0.45

Correlation Coefficient

FinVolution  LG DAX

Very good diversification

The 3 months correlation between FinVolution and DES2 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and LG DAX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG DAX Daily 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 LG DAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG DAX Daily has no effect on the direction of FinVolution i.e., FinVolution and LG DAX go up and down completely randomly.

Pair Corralation between FinVolution and LG DAX

Given the investment horizon of 90 days FinVolution Group is expected to generate 1.31 times more return on investment than LG DAX. However, FinVolution is 1.31 times more volatile than LG DAX Daily. It trades about 0.1 of its potential returns per unit of risk. LG DAX Daily is currently generating about -0.13 per unit of risk. If you would invest  628.00  in FinVolution Group on October 22, 2024 and sell it today you would earn a total of  74.00  from holding FinVolution Group or generate 11.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

FinVolution Group  vs.  LG DAX Daily

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.

LG DAX Daily

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG DAX Daily has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with FinVolution and LG DAX

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

The idea behind FinVolution Group and LG DAX Daily 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.