Correlation Between FinVolution and CNOOC

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

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

Diversification Opportunities for FinVolution and CNOOC

-0.18

Correlation Coefficient

FinVolution  CNOOC

Good diversification

The 3 months correlation between FinVolution and CNOOC is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and CNOOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC 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 CNOOC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNOOC has no effect on the direction of FinVolution i.e., FinVolution and CNOOC go up and down completely randomly.

Pair Corralation between FinVolution and CNOOC

Given the investment horizon of 90 days FinVolution is expected to generate 7.46 times less return on investment than CNOOC. But when comparing it to its historical volatility, FinVolution Group is 2.89 times less risky than CNOOC. It trades about 0.04 of its potential returns per unit of risk. CNOOC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  21.00  in CNOOC on October 5, 2024 and sell it today you would earn a total of  197.00  from holding CNOOC or generate 938.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.17%
Values	Daily Returns

FinVolution Group  vs.  CNOOC

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.

CNOOC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNOOC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FinVolution and CNOOC

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

The idea behind FinVolution Group and CNOOC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.