Correlation Between Mastercard and FinVolution

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

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

Diversification Opportunities for Mastercard and FinVolution

0.53

Correlation Coefficient

Mastercard  FinVolution

Very weak diversification

The 3 months correlation between Mastercard and FinVolution is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and FinVolution Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinVolution Group and Mastercard 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 Mastercard 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 Mastercard i.e., Mastercard and FinVolution go up and down completely randomly.

Pair Corralation between Mastercard and FinVolution

Allowing for the 90-day total investment horizon Mastercard is expected to generate 6.52 times less return on investment than FinVolution. But when comparing it to its historical volatility, Mastercard is 1.57 times less risky than FinVolution. It trades about 0.02 of its potential returns per unit of risk. FinVolution Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  680.00  in FinVolution Group on October 20, 2024 and sell it today you would earn a total of  22.00  from holding FinVolution Group or generate 3.24% return on investment over 90 days.

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

Mastercard  vs.  FinVolution Group

Mastercard

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mastercard is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

FinVolution Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 9 (%) 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 Mastercard and FinVolution

The main advantage of trading using opposite Mastercard and FinVolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard 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 Mastercard 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.