Correlation Between Visa and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Visa and Korea Computer 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 Computer 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 Computer Systems, you can compare the effects of market volatilities on Visa and Korea Computer 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 Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Korea Computer.
Diversification Opportunities for Visa and Korea Computer
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Korea is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Korea Computer Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer Systems 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 Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer Systems has no effect on the direction of Visa i.e., Visa and Korea Computer go up and down completely randomly.
Pair Corralation between Visa and Korea Computer
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.15 times more return on investment than Korea Computer. However, Visa Class A is 6.51 times less risky than Korea Computer. It trades about 0.5 of its potential returns per unit of risk. Korea Computer Systems is currently generating about -0.24 per unit of risk. If you would invest 31,304 in Visa Class A on November 5, 2024 and sell it today you would earn a total of 2,876 from holding Visa Class A or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
Visa Class A vs. Korea Computer Systems
Performance |
| Timeline |
| Visa Class A |
| Korea Computer Systems |
Visa and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Korea Computer
The main advantage of trading using opposite Visa and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Korea Computer 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 Computer will offset losses from the drop in Korea Computer's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Korea Computer vs. Settlebank | Korea Computer vs. Cafe24 Corp | Korea Computer vs. Daishin Information Communications | Korea Computer vs. SSR Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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