Correlation Between FinVolution and China Lending

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

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

Diversification Opportunities for FinVolution and China Lending

0.24

Correlation Coefficient

FinVolution  China Lending

Modest diversification

The 3 months correlation between FinVolution and China is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and China Lending Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Lending Corp 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 China Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Lending Corp has no effect on the direction of FinVolution i.e., FinVolution and China Lending go up and down completely randomly.

Pair Corralation between FinVolution and China Lending

If you would invest  526.00  in FinVolution Group on September 3, 2024 and sell it today you would earn a total of  172.00  from holding FinVolution Group or generate 32.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

FinVolution Group  vs.  China Lending Corp

FinVolution Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 14 (%) 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.

China Lending Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Lending Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, China Lending 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 China Lending

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

The idea behind FinVolution Group and China Lending Corp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.