Correlation Between Vodafone Group and FingerMotion

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

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

Diversification Opportunities for Vodafone Group and FingerMotion

0.53

Correlation Coefficient

Vodafone Group  FingerMotion

Very weak diversification

The 3 months correlation between Vodafone and FingerMotion is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and FingerMotion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FingerMotion and Vodafone Group 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 Vodafone Group PLC are associated (or correlated) with FingerMotion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FingerMotion has no effect on the direction of Vodafone Group i.e., Vodafone Group and FingerMotion go up and down completely randomly.

Pair Corralation between Vodafone Group and FingerMotion

Considering the 90-day investment horizon Vodafone Group is expected to generate 3.45 times less return on investment than FingerMotion. But when comparing it to its historical volatility, Vodafone Group PLC is 2.44 times less risky than FingerMotion. It trades about 0.11 of its potential returns per unit of risk. FingerMotion is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  199.00  in FingerMotion on September 15, 2024 and sell it today you would earn a total of  20.00  from holding FingerMotion or generate 10.05% return on investment over 90 days.

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

Vodafone Group PLC  vs.  FingerMotion

Vodafone Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodafone Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

FingerMotion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FingerMotion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, FingerMotion is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Vodafone Group and FingerMotion

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

The idea behind Vodafone Group PLC and FingerMotion 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.