Correlation Between FinVolution and Indivior PLC

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

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

Diversification Opportunities for FinVolution and Indivior PLC

0.61

Correlation Coefficient

FinVolution  Indivior PLC

Poor diversification

The 3 months correlation between FinVolution and Indivior is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Indivior PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indivior PLC 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 Indivior PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indivior PLC has no effect on the direction of FinVolution i.e., FinVolution and Indivior PLC go up and down completely randomly.

Pair Corralation between FinVolution and Indivior PLC

Given the investment horizon of 90 days FinVolution is expected to generate 3.19 times less return on investment than Indivior PLC. In addition to that, FinVolution is 1.19 times more volatile than Indivior PLC. It trades about 0.06 of its total potential returns per unit of risk. Indivior PLC is currently generating about 0.23 per unit of volatility. If you would invest  2,310  in Indivior PLC on October 4, 2024 and sell it today you would earn a total of  84.00  from holding Indivior PLC or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	2.67%
Values	Daily Returns

FinVolution Group  vs.  Indivior PLC

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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Indivior PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indivior PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Indivior PLC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FinVolution and Indivior PLC

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

The idea behind FinVolution Group and Indivior PLC 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.