Correlation Between FinVolution and RENTOKIL INITIAL

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

By analyzing existing cross correlation between FinVolution Group and RENTOKIL INITIAL ADR5, you can compare the effects of market volatilities on FinVolution and RENTOKIL INITIAL 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 RENTOKIL INITIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinVolution and RENTOKIL INITIAL.

Diversification Opportunities for FinVolution and RENTOKIL INITIAL

0.43

Correlation Coefficient

FinVolution  RENTOKIL INITIAL

Very weak diversification

The 3 months correlation between FinVolution and RENTOKIL is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and RENTOKIL INITIAL ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENTOKIL INITIAL ADR5 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 RENTOKIL INITIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENTOKIL INITIAL ADR5 has no effect on the direction of FinVolution i.e., FinVolution and RENTOKIL INITIAL go up and down completely randomly.

Pair Corralation between FinVolution and RENTOKIL INITIAL

Given the investment horizon of 90 days FinVolution Group is expected to generate 0.58 times more return on investment than RENTOKIL INITIAL. However, FinVolution Group is 1.71 times less risky than RENTOKIL INITIAL. It trades about 0.06 of its potential returns per unit of risk. RENTOKIL INITIAL ADR5 is currently generating about -0.01 per unit of risk. If you would invest  483.00  in FinVolution Group on October 4, 2024 and sell it today you would earn a total of  196.00  from holding FinVolution Group or generate 40.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.1%
Values	Daily Returns

FinVolution Group  vs.  RENTOKIL INITIAL ADR5

FinVolution Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FinVolution Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

RENTOKIL INITIAL ADR5

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RENTOKIL INITIAL ADR5 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RENTOKIL INITIAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FinVolution and RENTOKIL INITIAL

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

The idea behind FinVolution Group and RENTOKIL INITIAL ADR5 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 Global Correlations module to find global opportunities by holding instruments from different markets.