Correlation Between FinVolution and International Business

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

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

Diversification Opportunities for FinVolution and International Business

0.64

Correlation Coefficient

FinVolution  International Business

Poor diversification

The 3 months correlation between FinVolution and International is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of FinVolution i.e., FinVolution and International Business go up and down completely randomly.

Pair Corralation between FinVolution and International Business

Given the investment horizon of 90 days FinVolution Group is expected to generate 1.07 times more return on investment than International Business. However, FinVolution is 1.07 times more volatile than International Business Machines. It trades about -0.03 of its potential returns per unit of risk. International Business Machines is currently generating about -0.09 per unit of risk. If you would invest  686.00  in FinVolution Group on October 4, 2024 and sell it today you would lose (7.00) from holding FinVolution Group or give up 1.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.71%
Values	Daily Returns

FinVolution Group  vs.  International Business Machine

FinVolution Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FinVolution Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

International Business

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, International Business is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FinVolution and International Business

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

The idea behind FinVolution Group and International Business Machines 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.