Correlation Between Visa and Jiugui Liquor

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Can any of the company-specific risk be diversified away by investing in both Visa and Jiugui Liquor 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 Jiugui Liquor 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 Jiugui Liquor Co, you can compare the effects of market volatilities on Visa and Jiugui Liquor 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 Jiugui Liquor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Jiugui Liquor.

Diversification Opportunities for Visa and Jiugui Liquor

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Visa and Jiugui is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Jiugui Liquor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiugui Liquor 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 Jiugui Liquor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiugui Liquor has no effect on the direction of Visa i.e., Visa and Jiugui Liquor go up and down completely randomly.

Pair Corralation between Visa and Jiugui Liquor

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.36 times more return on investment than Jiugui Liquor. However, Visa Class A is 2.77 times less risky than Jiugui Liquor. It trades about 0.1 of its potential returns per unit of risk. Jiugui Liquor Co is currently generating about -0.02 per unit of risk. If you would invest  22,097  in Visa Class A on September 1, 2024 and sell it today you would earn a total of  9,411  from holding Visa Class A or generate 42.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy96.24%
ValuesDaily Returns

Visa Class A  vs.  Jiugui Liquor Co

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.
Jiugui Liquor 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Jiugui Liquor Co are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiugui Liquor sustained solid returns over the last few months and may actually be approaching a breakup point.

Visa and Jiugui Liquor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Jiugui Liquor

The main advantage of trading using opposite Visa and Jiugui Liquor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Jiugui Liquor 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 Jiugui Liquor will offset losses from the drop in Jiugui Liquor's long position.
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The idea behind Visa Class A and Jiugui Liquor Co 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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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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