Correlation Between FinVolution and Fuji Media

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

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

Diversification Opportunities for FinVolution and Fuji Media

0.59

Correlation Coefficient

FinVolution  Fuji Media

Very weak diversification

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

Pair Corralation between FinVolution and Fuji Media

Given the investment horizon of 90 days FinVolution Group is expected to generate 0.87 times more return on investment than Fuji Media. However, FinVolution Group is 1.15 times less risky than Fuji Media. It trades about 0.21 of its potential returns per unit of risk. Fuji Media Holdings is currently generating about 0.16 per unit of risk. If you would invest  694.00  in FinVolution Group on December 24, 2024 and sell it today you would earn a total of  310.00  from holding FinVolution Group or generate 44.67% return on investment over 90 days.

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

FinVolution Group  vs.  Fuji Media Holdings

FinVolution Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 16 (%) 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.

Fuji Media Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Media Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fuji Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FinVolution and Fuji Media

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

The idea behind FinVolution Group and Fuji Media Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..