Correlation Between FinVolution and Short-term Fund

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

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

Diversification Opportunities for FinVolution and Short-term Fund

0.81

Correlation Coefficient

FinVolution  Short-term Fund

Very poor diversification

The 3 months correlation between FinVolution and Short-term is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Short Term Fund R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Fund 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 Short-term Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Fund has no effect on the direction of FinVolution i.e., FinVolution and Short-term Fund go up and down completely randomly.

Pair Corralation between FinVolution and Short-term Fund

Given the investment horizon of 90 days FinVolution Group is expected to generate 27.01 times more return on investment than Short-term Fund. However, FinVolution is 27.01 times more volatile than Short Term Fund R. It trades about 0.12 of its potential returns per unit of risk. Short Term Fund R is currently generating about 0.25 per unit of risk. If you would invest  565.00  in FinVolution Group on October 24, 2024 and sell it today you would earn a total of  137.00  from holding FinVolution Group or generate 24.25% 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.  Short Term Fund R

FinVolution Group

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 10 (%) 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.

Short Term Fund

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Fund R are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short-term Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FinVolution and Short-term Fund

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

The idea behind FinVolution Group and Short Term Fund R 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..