Correlation Between Visa and China Petrochemical
Can any of the company-specific risk be diversified away by investing in both Visa and China Petrochemical 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 China Petrochemical 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 China Petrochemical Development, you can compare the effects of market volatilities on Visa and China Petrochemical 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 China Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and China Petrochemical.
Diversification Opportunities for Visa and China Petrochemical
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and China is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and China Petrochemical Developmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petrochemical 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 China Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petrochemical has no effect on the direction of Visa i.e., Visa and China Petrochemical go up and down completely randomly.
Pair Corralation between Visa and China Petrochemical
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.93 times more return on investment than China Petrochemical. However, Visa Class A is 1.07 times less risky than China Petrochemical. It trades about 0.34 of its potential returns per unit of risk. China Petrochemical Development is currently generating about 0.07 per unit of risk. If you would invest 28,365 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 2,817 from holding Visa Class A or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. China Petrochemical Developmen
Performance |
| Timeline |
| Visa Class A |
| China Petrochemical |
Visa and China Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and China Petrochemical
The main advantage of trading using opposite Visa and China Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, China Petrochemical 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 China Petrochemical will offset losses from the drop in China Petrochemical's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| China Petrochemical vs. USI Corp | China Petrochemical vs. Grand Pacific Petrochemical | China Petrochemical vs. Taiwan Styrene Monomer | China Petrochemical vs. China Steel Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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