Correlation Between FinVolution and TELECOM PLUS

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Can any of the company-specific risk be diversified away by investing in both FinVolution and TELECOM PLUS 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 TELECOM PLUS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FinVolution Group and TELECOM PLUS PLC, you can compare the effects of market volatilities on FinVolution and TELECOM PLUS 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 TELECOM PLUS. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinVolution and TELECOM PLUS.

Diversification Opportunities for FinVolution and TELECOM PLUS

0.36
  Correlation Coefficient

Weak diversification

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

Pair Corralation between FinVolution and TELECOM PLUS

Given the investment horizon of 90 days FinVolution Group is expected to generate 0.7 times more return on investment than TELECOM PLUS. However, FinVolution Group is 1.42 times less risky than TELECOM PLUS. It trades about 0.04 of its potential returns per unit of risk. TELECOM PLUS PLC is currently generating about 0.01 per unit of risk. If you would invest  496.00  in FinVolution Group on October 4, 2024 and sell it today you would earn a total of  175.00  from holding FinVolution Group or generate 35.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.0%
ValuesDaily Returns

FinVolution Group  vs.  TELECOM PLUS PLC

 Performance 
       Timeline  
FinVolution Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
TELECOM PLUS PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days TELECOM PLUS PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TELECOM PLUS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

FinVolution and TELECOM PLUS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FinVolution and TELECOM PLUS

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

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