Correlation Between FinVolution and WESTERN DIGITAL

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

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

Diversification Opportunities for FinVolution and WESTERN DIGITAL

0.3

Correlation Coefficient

FinVolution  WESTERN DIGITAL

Weak diversification

The 3 months correlation between FinVolution and WESTERN is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and WESTERN DIGITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN DIGITAL 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 WESTERN DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN DIGITAL has no effect on the direction of FinVolution i.e., FinVolution and WESTERN DIGITAL go up and down completely randomly.

Pair Corralation between FinVolution and WESTERN DIGITAL

Given the investment horizon of 90 days FinVolution Group is expected to generate 1.08 times more return on investment than WESTERN DIGITAL. However, FinVolution is 1.08 times more volatile than WESTERN DIGITAL. It trades about 0.02 of its potential returns per unit of risk. WESTERN DIGITAL is currently generating about -0.02 per unit of risk. If you would invest  675.00  in FinVolution Group on October 5, 2024 and sell it today you would earn a total of  4.00  from holding FinVolution Group or generate 0.59% 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.  WESTERN DIGITAL

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.

WESTERN DIGITAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTERN DIGITAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, WESTERN DIGITAL is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FinVolution and WESTERN DIGITAL

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

The idea behind FinVolution Group and WESTERN DIGITAL 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.