Correlation Between Sunlight Financial and FinVolution

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

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

Diversification Opportunities for Sunlight Financial and FinVolution

0.0

Correlation Coefficient

Sunlight Financial  FinVolution

Pay attention - limited upside

The 3 months correlation between Sunlight and FinVolution is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sunlight Financial Holdings and FinVolution Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinVolution Group and Sunlight Financial 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 Sunlight Financial Holdings 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 Sunlight Financial i.e., Sunlight Financial and FinVolution go up and down completely randomly.

Pair Corralation between Sunlight Financial and FinVolution

If you would invest  698.00  in FinVolution Group on November 28, 2024 and sell it today you would earn a total of  161.00  from holding FinVolution Group or generate 23.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sunlight Financial Holdings  vs.  FinVolution Group

Sunlight Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunlight Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Sunlight Financial is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

FinVolution Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 14 (%) 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 Sunlight Financial and FinVolution

The main advantage of trading using opposite Sunlight Financial and FinVolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunlight Financial 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 Sunlight Financial Holdings 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.