Correlation Between FinVolution and Nexxen International

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

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

Diversification Opportunities for FinVolution and Nexxen International

0.8

Correlation Coefficient

FinVolution  Nexxen International

Very poor diversification

The 3 months correlation between FinVolution and Nexxen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Nexxen International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexxen International 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 Nexxen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexxen International has no effect on the direction of FinVolution i.e., FinVolution and Nexxen International go up and down completely randomly.

Pair Corralation between FinVolution and Nexxen International

Given the investment horizon of 90 days FinVolution is expected to generate 8.46 times less return on investment than Nexxen International. But when comparing it to its historical volatility, FinVolution Group is 1.62 times less risky than Nexxen International. It trades about 0.03 of its potential returns per unit of risk. Nexxen International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  768.00  in Nexxen International on October 6, 2024 and sell it today you would earn a total of  271.00  from holding Nexxen International or generate 35.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

FinVolution Group  vs.  Nexxen International

FinVolution Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 2 (%) 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.

Nexxen International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nexxen International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Nexxen International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FinVolution and Nexxen International

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

The idea behind FinVolution Group and Nexxen International 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.