Correlation Between FinVolution and Stryker

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

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

Diversification Opportunities for FinVolution and Stryker

0.36

Correlation Coefficient

FinVolution  Stryker

Weak diversification

The 3 months correlation between FinVolution and Stryker is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker 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 Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of FinVolution i.e., FinVolution and Stryker go up and down completely randomly.

Pair Corralation between FinVolution and Stryker

Given the investment horizon of 90 days FinVolution is expected to generate 4.98 times less return on investment than Stryker. In addition to that, FinVolution is 1.57 times more volatile than Stryker. It trades about 0.02 of its total potential returns per unit of risk. Stryker is currently generating about 0.12 per unit of volatility. If you would invest  31,414  in Stryker on October 5, 2024 and sell it today you would earn a total of  3,476  from holding Stryker or generate 11.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

FinVolution Group  vs.  Stryker

FinVolution Group

Risk-Adjusted Performance

1 of 100

Very 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.

Stryker

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Stryker has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Stryker may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FinVolution and Stryker

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

The idea behind FinVolution Group and Stryker 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.

Check out your portfolio center.

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.