Correlation Between FinVolution and St James

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

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

Diversification Opportunities for FinVolution and St James

-0.37

Correlation Coefficient

FinVolution  St James

Very good diversification

The 3 months correlation between FinVolution and LRDJF is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and St James Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St James Gold 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 St James. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St James Gold has no effect on the direction of FinVolution i.e., FinVolution and St James go up and down completely randomly.

Pair Corralation between FinVolution and St James

Given the investment horizon of 90 days FinVolution Group is expected to under-perform the St James. But the stock apears to be less risky and, when comparing its historical volatility, FinVolution Group is 5.12 times less risky than St James. The stock trades about -0.02 of its potential returns per unit of risk. The St James Gold is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8.70  in St James Gold on October 4, 2024 and sell it today you would lose (2.70) from holding St James Gold or give up 31.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

FinVolution Group  vs.  St James Gold

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.

St James Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days St James Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile forward-looking indicators, St James may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FinVolution and St James

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

The idea behind FinVolution Group and St James Gold 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.