Correlation Between FinVolution and RMB Holdings

Can any of the company-specific risk be diversified away by investing in both FinVolution and RMB 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 RMB 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 RMB Holdings, you can compare the effects of market volatilities on FinVolution and RMB 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 RMB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinVolution and RMB Holdings.

Diversification Opportunities for FinVolution and RMB Holdings

0.55

Correlation Coefficient

FinVolution  RMB Holdings

Very weak diversification

The 3 months correlation between FinVolution and RMB is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and RMB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMB 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 RMB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMB Holdings has no effect on the direction of FinVolution i.e., FinVolution and RMB Holdings go up and down completely randomly.

Pair Corralation between FinVolution and RMB Holdings

Given the investment horizon of 90 days FinVolution is expected to generate 3.82 times less return on investment than RMB Holdings. In addition to that, FinVolution is 1.3 times more volatile than RMB Holdings. It trades about 0.01 of its total potential returns per unit of risk. RMB Holdings is currently generating about 0.07 per unit of volatility. If you would invest  4,100  in RMB Holdings on October 5, 2024 and sell it today you would earn a total of  300.00  from holding RMB Holdings or generate 7.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

FinVolution Group  vs.  RMB Holdings

FinVolution Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 1 (%) 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.

RMB Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RMB Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, RMB Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FinVolution and RMB Holdings

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

The idea behind FinVolution Group and RMB 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.