Correlation Between Visa and Asiana Airlines
Can any of the company-specific risk be diversified away by investing in both Visa and Asiana Airlines 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 Asiana Airlines 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 Asiana Airlines, you can compare the effects of market volatilities on Visa and Asiana Airlines 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 Asiana Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Asiana Airlines.
Diversification Opportunities for Visa and Asiana Airlines
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Asiana is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Asiana Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiana Airlines 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 Asiana Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiana Airlines has no effect on the direction of Visa i.e., Visa and Asiana Airlines go up and down completely randomly.
Pair Corralation between Visa and Asiana Airlines
Taking into account the 90-day investment horizon Visa is expected to generate 1.09 times less return on investment than Asiana Airlines. But when comparing it to its historical volatility, Visa Class A is 1.62 times less risky than Asiana Airlines. It trades about 0.34 of its potential returns per unit of risk. Asiana Airlines is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 994,000 in Asiana Airlines on August 29, 2024 and sell it today you would earn a total of 105,000 from holding Asiana Airlines or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Asiana Airlines
Performance |
| Timeline |
| Visa Class A |
| Asiana Airlines |
Visa and Asiana Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Asiana Airlines
The main advantage of trading using opposite Visa and Asiana Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Asiana Airlines 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 Asiana Airlines will offset losses from the drop in Asiana Airlines' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Asiana Airlines vs. Home Center Holdings | Asiana Airlines vs. Hyunwoo Industrial Co | Asiana Airlines vs. Daelim Industrial Co | Asiana Airlines vs. Seoyon Topmetal Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Stocks Directory Find actively traded stocks across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |