Correlation Between Finance Of and FinVolution

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

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

Diversification Opportunities for Finance Of and FinVolution

-0.68

Correlation Coefficient

Finance Of  FinVolution

Excellent diversification

The 3 months correlation between Finance and FinVolution is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Finance of America and FinVolution Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinVolution Group and Finance Of 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 Finance of America are associated (or correlated) with FinVolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FinVolution Group has no effect on the direction of Finance Of i.e., Finance Of and FinVolution go up and down completely randomly.

Pair Corralation between Finance Of and FinVolution

Considering the 90-day investment horizon Finance of America is expected to under-perform the FinVolution. In addition to that, Finance Of is 1.41 times more volatile than FinVolution Group. It trades about -0.02 of its total potential returns per unit of risk. FinVolution Group is currently generating about 0.21 per unit of volatility. If you would invest  687.00  in FinVolution Group on December 21, 2024 and sell it today you would earn a total of  312.00  from holding FinVolution Group or generate 45.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Finance of America  vs.  FinVolution Group

Finance of America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Finance of America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Finance Of is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

FinVolution Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, FinVolution showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finance Of and FinVolution

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

The idea behind Finance of America and FinVolution Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.