Correlation Between FinVolution and Heidelberg Materials

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

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

Diversification Opportunities for FinVolution and Heidelberg Materials

0.52

Correlation Coefficient

FinVolution  Heidelberg Materials

Very weak diversification

The 3 months correlation between FinVolution and Heidelberg is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials 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 Heidelberg Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Materials has no effect on the direction of FinVolution i.e., FinVolution and Heidelberg Materials go up and down completely randomly.

Pair Corralation between FinVolution and Heidelberg Materials

Given the investment horizon of 90 days FinVolution Group is expected to generate 1.32 times more return on investment than Heidelberg Materials. However, FinVolution is 1.32 times more volatile than Heidelberg Materials AG. It trades about 0.09 of its potential returns per unit of risk. Heidelberg Materials AG is currently generating about 0.11 per unit of risk. If you would invest  452.00  in FinVolution Group on October 5, 2024 and sell it today you would earn a total of  227.00  from holding FinVolution Group or generate 50.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

FinVolution Group  vs.  Heidelberg Materials AG

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.

Heidelberg Materials

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Heidelberg Materials AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady forward indicators, Heidelberg Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FinVolution and Heidelberg Materials

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

The idea behind FinVolution Group and Heidelberg Materials AG 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.