Correlation Between FinVolution and INDOSAT -B-

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

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

Diversification Opportunities for FinVolution and INDOSAT -B-

0.29

Correlation Coefficient

FinVolution  INDOSAT -B-

Modest diversification

The 3 months correlation between FinVolution and INDOSAT is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and INDOSAT B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOSAT -B- 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 INDOSAT -B-. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOSAT -B- has no effect on the direction of FinVolution i.e., FinVolution and INDOSAT -B- go up and down completely randomly.

Pair Corralation between FinVolution and INDOSAT -B-

Given the investment horizon of 90 days FinVolution Group is expected to generate 0.53 times more return on investment than INDOSAT -B-. However, FinVolution Group is 1.9 times less risky than INDOSAT -B-. It trades about 0.06 of its potential returns per unit of risk. INDOSAT B is currently generating about 0.0 per unit of risk. If you would invest  483.00  in FinVolution Group on October 4, 2024 and sell it today you would earn a total of  196.00  from holding FinVolution Group or generate 40.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.4%
Values	Daily Returns

FinVolution Group  vs.  INDOSAT B

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.

INDOSAT -B-

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDOSAT B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with FinVolution and INDOSAT -B-

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

The idea behind FinVolution Group and INDOSAT B 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.