Correlation Between FinVolution and Simat Technologies

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

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

Diversification Opportunities for FinVolution and Simat Technologies

-0.6

Correlation Coefficient

FinVolution  Simat Technologies

Excellent diversification

The 3 months correlation between FinVolution and Simat is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Simat Technologies Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simat Technologies Public 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 Simat Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simat Technologies Public has no effect on the direction of FinVolution i.e., FinVolution and Simat Technologies go up and down completely randomly.

Pair Corralation between FinVolution and Simat Technologies

Given the investment horizon of 90 days FinVolution Group is expected to generate 0.55 times more return on investment than Simat Technologies. However, FinVolution Group is 1.81 times less risky than Simat Technologies. It trades about -0.02 of its potential returns per unit of risk. Simat Technologies Public is currently generating about -0.09 per unit of risk. If you would invest  709.00  in FinVolution Group on October 4, 2024 and sell it today you would lose (30.00) from holding FinVolution Group or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

FinVolution Group  vs.  Simat Technologies Public

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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Simat Technologies Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simat Technologies Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with FinVolution and Simat Technologies

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

The idea behind FinVolution Group and Simat Technologies Public 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.