Correlation Between Visa and Guangzhou Tinci

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

Diversification Opportunities for Visa and Guangzhou Tinci

VisaGuangzhouDiversified AwayVisaGuangzhouDiversified Away100%
-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Visa and Guangzhou is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Guangzhou Tinci Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Tinci Materials 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 Guangzhou Tinci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Tinci Materials has no effect on the direction of Visa i.e., Visa and Guangzhou Tinci go up and down completely randomly.

Pair Corralation between Visa and Guangzhou Tinci

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.42 times more return on investment than Guangzhou Tinci. However, Visa Class A is 2.35 times less risky than Guangzhou Tinci. It trades about 0.27 of its potential returns per unit of risk. Guangzhou Tinci Materials is currently generating about -0.08 per unit of risk. If you would invest  31,248  in Visa Class A on December 3, 2024 and sell it today you would earn a total of  5,023  from holding Visa Class A or generate 16.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.08%
ValuesDaily Returns

Visa Class A  vs.  Guangzhou Tinci Materials

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-5051015
JavaScript chart by amCharts 3.21.15V 002709
       Timeline  
Visa Class A 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 21 (%) 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.
JavaScript chart by amCharts 3.21.15JanFebFebMar310320330340350360
Guangzhou Tinci Materials 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Guangzhou Tinci Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFebMar1819202122232425

Visa and Guangzhou Tinci Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.73-2.04-1.36-0.670.00.771.552.333.11 0.10.20.30.4
JavaScript chart by amCharts 3.21.15V 002709
       Returns  

Pair Trading with Visa and Guangzhou Tinci

The main advantage of trading using opposite Visa and Guangzhou Tinci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Guangzhou Tinci 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 Guangzhou Tinci will offset losses from the drop in Guangzhou Tinci's long position.
The idea behind Visa Class A and Guangzhou Tinci Materials 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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