Correlation Between FinVolution and OneMain Holdings

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

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

Diversification Opportunities for FinVolution and OneMain Holdings

-0.14

Correlation Coefficient

FinVolution  OneMain Holdings

Good diversification

The 3 months correlation between FinVolution and OneMain is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and OneMain Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneMain Holdings 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 OneMain Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneMain Holdings has no effect on the direction of FinVolution i.e., FinVolution and OneMain Holdings go up and down completely randomly.

Pair Corralation between FinVolution and OneMain Holdings

Given the investment horizon of 90 days FinVolution Group is expected to generate 1.6 times more return on investment than OneMain Holdings. However, FinVolution is 1.6 times more volatile than OneMain Holdings. It trades about 0.21 of its potential returns per unit of risk. OneMain Holdings is currently generating about -0.01 per unit of risk. If you would invest  687.00  in FinVolution Group on December 21, 2024 and sell it today you would earn a total of  312.00  from holding FinVolution Group or generate 45.41% return on investment over 90 days.

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

FinVolution Group  vs.  OneMain Holdings

FinVolution Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 16 (%) 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.

OneMain Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days OneMain Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, OneMain Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FinVolution and OneMain Holdings

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

The idea behind FinVolution Group and OneMain Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.