Correlation Between FinVolution and Tokyu REIT

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

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

Diversification Opportunities for FinVolution and Tokyu REIT

0.39

Correlation Coefficient

FinVolution  Tokyu REIT

Weak diversification

The 3 months correlation between FinVolution and Tokyu is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Tokyu REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyu REIT 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 Tokyu REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyu REIT has no effect on the direction of FinVolution i.e., FinVolution and Tokyu REIT go up and down completely randomly.

Pair Corralation between FinVolution and Tokyu REIT

Given the investment horizon of 90 days FinVolution Group is expected to generate 0.1 times more return on investment than Tokyu REIT. However, FinVolution Group is 10.43 times less risky than Tokyu REIT. It trades about 0.04 of its potential returns per unit of risk. Tokyu REIT is currently generating about -0.14 per unit of risk. If you would invest  494.00  in FinVolution Group on October 5, 2024 and sell it today you would earn a total of  184.00  from holding FinVolution Group or generate 37.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	10.3%
Values	Daily Returns

FinVolution Group  vs.  Tokyu REIT

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.

Tokyu REIT

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FinVolution and Tokyu REIT

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

The idea behind FinVolution Group and Tokyu REIT 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.