Correlation Between FinVolution and Amundi SP

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

By analyzing existing cross correlation between FinVolution Group and Amundi SP 500, you can compare the effects of market volatilities on FinVolution and Amundi SP 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 Amundi SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinVolution and Amundi SP.

Diversification Opportunities for FinVolution and Amundi SP

-0.15

Correlation Coefficient

FinVolution  Amundi SP

Good diversification

The 3 months correlation between FinVolution and Amundi is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Amundi SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi SP 500 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 Amundi SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi SP 500 has no effect on the direction of FinVolution i.e., FinVolution and Amundi SP go up and down completely randomly.

Pair Corralation between FinVolution and Amundi SP

Given the investment horizon of 90 days FinVolution Group is expected to generate 2.48 times more return on investment than Amundi SP. However, FinVolution is 2.48 times more volatile than Amundi SP 500. It trades about 0.12 of its potential returns per unit of risk. Amundi SP 500 is currently generating about -0.02 per unit of risk. If you would invest  605.00  in FinVolution Group on October 21, 2024 and sell it today you would earn a total of  97.00  from holding FinVolution Group or generate 16.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

FinVolution Group  vs.  Amundi SP 500

FinVolution Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, FinVolution showed solid returns over the last few months and may actually be approaching a breakup point.

Amundi SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Amundi SP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FinVolution and Amundi SP

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

The idea behind FinVolution Group and Amundi SP 500 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.