Correlation Between Visa and FinVolution
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and FinVolution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and FinVolution Group, you can compare the effects of market volatilities on Visa 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 Visa with a short position of FinVolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and FinVolution.
Diversification Opportunities for Visa and FinVolution
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visa and FinVolution is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and FinVolution Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinVolution Group and Visa 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 Visa Class A 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 Visa i.e., Visa and FinVolution go up and down completely randomly.
Pair Corralation between Visa and FinVolution
Taking into account the 90-day investment horizon Visa is expected to generate 1.25 times less return on investment than FinVolution. But when comparing it to its historical volatility, Visa Class A is 1.98 times less risky than FinVolution. It trades about 0.33 of its potential returns per unit of risk. FinVolution Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 600.00 in FinVolution Group on August 31, 2024 and sell it today you would earn a total of 63.00 from holding FinVolution Group or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. FinVolution Group
Performance |
| Timeline |
| Visa Class A |
| FinVolution Group |
Visa and FinVolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and FinVolution
The main advantage of trading using opposite Visa and FinVolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| FinVolution vs. Visa Class A | FinVolution vs. RLJ Lodging Trust | FinVolution vs. Aquagold International | FinVolution vs. Stepstone Group |
Check out your portfolio center.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.
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