Correlation Between Visa and Korea Steel
Can any of the company-specific risk be diversified away by investing in both Visa and Korea Steel 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 Korea Steel 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 Korea Steel Co, you can compare the effects of market volatilities on Visa and Korea Steel 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 Korea Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Korea Steel.
Diversification Opportunities for Visa and Korea Steel
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Korea is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Korea Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Steel 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 Korea Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Steel has no effect on the direction of Visa i.e., Visa and Korea Steel go up and down completely randomly.
Pair Corralation between Visa and Korea Steel
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.75 times more return on investment than Korea Steel. However, Visa Class A is 1.33 times less risky than Korea Steel. It trades about 0.1 of its potential returns per unit of risk. Korea Steel Co is currently generating about -0.07 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 Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.31% |
| Values | Daily Returns |
Visa Class A vs. Korea Steel Co
Performance |
| Timeline |
| Visa Class A |
| Korea Steel |
Visa and Korea Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Korea Steel
The main advantage of trading using opposite Visa and Korea Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Korea Steel 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 Korea Steel will offset losses from the drop in Korea Steel's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Korea Steel vs. PJ Electronics Co | Korea Steel vs. Kukil Metal Co | Korea Steel vs. Dongwon Metal Co | Korea Steel vs. Heungkuk Metaltech CoLtd |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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