Correlation Between FinVolution and Victoria Care

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

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

Diversification Opportunities for FinVolution and Victoria Care

-0.2

Correlation Coefficient

FinVolution  Victoria Care

Good diversification

The 3 months correlation between FinVolution and Victoria is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Victoria Care Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victoria Care Indonesia 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 Victoria Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victoria Care Indonesia has no effect on the direction of FinVolution i.e., FinVolution and Victoria Care go up and down completely randomly.

Pair Corralation between FinVolution and Victoria Care

Given the investment horizon of 90 days FinVolution Group is expected to generate 2.85 times more return on investment than Victoria Care. However, FinVolution is 2.85 times more volatile than Victoria Care Indonesia. It trades about 0.03 of its potential returns per unit of risk. Victoria Care Indonesia is currently generating about 0.08 per unit of risk. If you would invest  675.00  in FinVolution Group on October 6, 2024 and sell it today you would earn a total of  16.00  from holding FinVolution Group or generate 2.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

FinVolution Group  vs.  Victoria Care Indonesia

FinVolution Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 2 (%) 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.

Victoria Care Indonesia

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Victoria Care Indonesia are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Victoria Care is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with FinVolution and Victoria Care

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

The idea behind FinVolution Group and Victoria Care Indonesia 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.