Correlation Between FinVolution and Key Energy

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

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

Diversification Opportunities for FinVolution and Key Energy

0.07

Correlation Coefficient

FinVolution  Key Energy

Significant diversification

The 3 months correlation between FinVolution and Key is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Key Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Energy Services 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 Key Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Key Energy Services has no effect on the direction of FinVolution i.e., FinVolution and Key Energy go up and down completely randomly.

Pair Corralation between FinVolution and Key Energy

If you would invest  10.00  in Key Energy Services on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Key Energy Services or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

FinVolution Group  vs.  Key Energy Services

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.

Key Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Key Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Key Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FinVolution and Key Energy

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

The idea behind FinVolution Group and Key Energy Services 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.