Correlation Between Visa and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both Visa and Kumho Petro 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 Kumho Petro 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 Kumho Petro Chemical, you can compare the effects of market volatilities on Visa and Kumho Petro 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 Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Kumho Petro.
Diversification Opportunities for Visa and Kumho Petro
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Kumho is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Kumho Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Petro Chemical 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 Kumho Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Petro Chemical has no effect on the direction of Visa i.e., Visa and Kumho Petro go up and down completely randomly.
Pair Corralation between Visa and Kumho Petro
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.47 times more return on investment than Kumho Petro. However, Visa Class A is 2.11 times less risky than Kumho Petro. It trades about 0.05 of its potential returns per unit of risk. Kumho Petro Chemical is currently generating about 0.0 per unit of risk. If you would invest 30,980 in Visa Class A on January 10, 2025 and sell it today you would earn a total of 2,263 from holding Visa Class A or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.04% |
| Values | Daily Returns |
Visa Class A vs. Kumho Petro Chemical
Performance |
| Timeline |
| Visa Class A |
| Kumho Petro Chemical |
Visa and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Kumho Petro
The main advantage of trading using opposite Visa and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Kumho Petro 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 Kumho Petro will offset losses from the drop in Kumho Petro's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Kumho Petro vs. POSCO Holdings | Kumho Petro vs. Hanwha Solutions | Kumho Petro vs. Lotte Chemical Corp | Kumho Petro vs. Hyundai Steel |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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