Correlation Between X Financial and Finch Therapeutics

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

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

Diversification Opportunities for X Financial and Finch Therapeutics

-0.11

Correlation Coefficient

X Financial  Finch Therapeutics

Good diversification

The 3 months correlation between XYF and Finch is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding X Financial Class and Finch Therapeutics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finch Therapeutics and X 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 X Financial Class are associated (or correlated) with Finch Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finch Therapeutics has no effect on the direction of X Financial i.e., X Financial and Finch Therapeutics go up and down completely randomly.

Pair Corralation between X Financial and Finch Therapeutics

If you would invest  684.00  in X Financial Class on October 6, 2024 and sell it today you would earn a total of  164.00  from holding X Financial Class or generate 23.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.44%
Values	Daily Returns

X Financial Class  vs.  Finch Therapeutics Group

X Financial Class

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Finch Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Finch Therapeutics Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Finch Therapeutics is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with X Financial and Finch Therapeutics

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

The idea behind X Financial Class and Finch Therapeutics 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.