Correlation Between Visa and CIMB Group
Can any of the company-specific risk be diversified away by investing in both Visa and CIMB Group 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 CIMB Group 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 CIMB Group Holdings, you can compare the effects of market volatilities on Visa and CIMB Group 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 CIMB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and CIMB Group.
Diversification Opportunities for Visa and CIMB Group
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and CIMB is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and CIMB Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMB Group Holdings 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 CIMB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMB Group Holdings has no effect on the direction of Visa i.e., Visa and CIMB Group go up and down completely randomly.
Pair Corralation between Visa and CIMB Group
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.81 times more return on investment than CIMB Group. However, Visa is 1.81 times more volatile than CIMB Group Holdings. It trades about 0.33 of its potential returns per unit of risk. CIMB Group Holdings is currently generating about 0.31 per unit of risk. If you would invest 28,365 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 2,627 from holding Visa Class A or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Visa Class A vs. CIMB Group Holdings
Performance |
| Timeline |
| Visa Class A |
| CIMB Group Holdings |
Visa and CIMB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and CIMB Group
The main advantage of trading using opposite Visa and CIMB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, CIMB Group 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 CIMB Group will offset losses from the drop in CIMB Group's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| CIMB Group vs. ONETECH SOLUTIONS HOLDINGS | CIMB Group vs. Cloudpoint Technology Berhad | CIMB Group vs. Resintech Bhd | CIMB Group vs. FARM FRESH BERHAD |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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