Correlation Between Visa and Hanwha Chemical
Can any of the company-specific risk be diversified away by investing in both Visa and Hanwha Chemical 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 Hanwha Chemical 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 Hanwha Chemical Corp, you can compare the effects of market volatilities on Visa and Hanwha Chemical 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 Hanwha Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Hanwha Chemical.
Diversification Opportunities for Visa and Hanwha Chemical
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Hanwha is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Hanwha Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Chemical Corp 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 Hanwha Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Chemical Corp has no effect on the direction of Visa i.e., Visa and Hanwha Chemical go up and down completely randomly.
Pair Corralation between Visa and Hanwha Chemical
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.29 times more return on investment than Hanwha Chemical. However, Visa Class A is 3.41 times less risky than Hanwha Chemical. It trades about 0.09 of its potential returns per unit of risk. Hanwha Chemical Corp is currently generating about -0.04 per unit of risk. If you would invest 22,583 in Visa Class A on November 6, 2024 and sell it today you would earn a total of 11,803 from holding Visa Class A or generate 52.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.11% |
| Values | Daily Returns |
Visa Class A vs. Hanwha Chemical Corp
Performance |
| Timeline |
| Visa Class A |
| Hanwha Chemical Corp |
Visa and Hanwha Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Hanwha Chemical
The main advantage of trading using opposite Visa and Hanwha Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Hanwha Chemical 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 Hanwha Chemical will offset losses from the drop in Hanwha Chemical's long position.| Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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