Correlation Between FinVolution and EasyJet PLC

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

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

Diversification Opportunities for FinVolution and EasyJet PLC

0.59

Correlation Coefficient

FinVolution  EasyJet PLC

Very weak diversification

The 3 months correlation between FinVolution and EasyJet is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and EasyJet PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EasyJet PLC 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 EasyJet PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EasyJet PLC has no effect on the direction of FinVolution i.e., FinVolution and EasyJet PLC go up and down completely randomly.

Pair Corralation between FinVolution and EasyJet PLC

Given the investment horizon of 90 days FinVolution Group is expected to generate 1.71 times more return on investment than EasyJet PLC. However, FinVolution is 1.71 times more volatile than EasyJet PLC. It trades about -0.04 of its potential returns per unit of risk. EasyJet PLC is currently generating about -0.09 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

FinVolution Group  vs.  EasyJet PLC

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.

EasyJet PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EasyJet PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, EasyJet PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FinVolution and EasyJet PLC

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

The idea behind FinVolution Group and EasyJet PLC 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.