Correlation Between FinVolution and Oversea Chinese

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

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

Diversification Opportunities for FinVolution and Oversea Chinese

-0.13

Correlation Coefficient

FinVolution  Oversea Chinese

Good diversification

The 3 months correlation between FinVolution and Oversea is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Oversea Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oversea Chinese Banking 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 Oversea Chinese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oversea Chinese Banking has no effect on the direction of FinVolution i.e., FinVolution and Oversea Chinese go up and down completely randomly.

Pair Corralation between FinVolution and Oversea Chinese

Given the investment horizon of 90 days FinVolution Group is expected to generate 2.84 times more return on investment than Oversea Chinese. However, FinVolution is 2.84 times more volatile than Oversea Chinese Banking. It trades about 0.19 of its potential returns per unit of risk. Oversea Chinese Banking is currently generating about 0.03 per unit of risk. If you would invest  680.00  in FinVolution Group on December 28, 2024 and sell it today you would earn a total of  302.00  from holding FinVolution Group or generate 44.41% 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.  Oversea Chinese Banking

FinVolution Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, FinVolution showed solid returns over the last few months and may actually be approaching a breakup point.

Oversea Chinese Banking

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oversea Chinese Banking are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Oversea Chinese is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FinVolution and Oversea Chinese

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

The idea behind FinVolution Group and Oversea Chinese Banking 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.