Correlation Between FinVolution and HSBC MSCI

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

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

Diversification Opportunities for FinVolution and HSBC MSCI

0.77

Correlation Coefficient

FinVolution  HSBC MSCI

Poor diversification

The 3 months correlation between FinVolution and HSBC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and HSBC MSCI WORLD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI WORLD 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 HSBC MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC MSCI WORLD has no effect on the direction of FinVolution i.e., FinVolution and HSBC MSCI go up and down completely randomly.

Pair Corralation between FinVolution and HSBC MSCI

Given the investment horizon of 90 days FinVolution Group is expected to generate 2.67 times more return on investment than HSBC MSCI. However, FinVolution is 2.67 times more volatile than HSBC MSCI WORLD. It trades about 0.13 of its potential returns per unit of risk. HSBC MSCI WORLD is currently generating about 0.23 per unit of risk. If you would invest  625.00  in FinVolution Group on October 6, 2024 and sell it today you would earn a total of  66.00  from holding FinVolution Group or generate 10.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.12%
Values	Daily Returns

FinVolution Group  vs.  HSBC MSCI WORLD

FinVolution Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 2 (%) 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.

HSBC MSCI WORLD

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC MSCI WORLD are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, HSBC MSCI may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FinVolution and HSBC MSCI

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

The idea behind FinVolution Group and HSBC MSCI WORLD 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.