Correlation Between Visa and Tong Yang
Can any of the company-specific risk be diversified away by investing in both Visa and Tong Yang 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 Tong Yang 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 Tong Yang Industry, you can compare the effects of market volatilities on Visa and Tong Yang 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 Tong Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Tong Yang.
Diversification Opportunities for Visa and Tong Yang
Very weak diversification
The 3 months correlation between Visa and Tong is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Tong Yang Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Yang Industry 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 Tong Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Yang Industry has no effect on the direction of Visa i.e., Visa and Tong Yang go up and down completely randomly.
Pair Corralation between Visa and Tong Yang
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.5 times more return on investment than Tong Yang. However, Visa Class A is 2.0 times less risky than Tong Yang. It trades about 0.49 of its potential returns per unit of risk. Tong Yang Industry is currently generating about -0.1 per unit of risk. If you would invest 31,440 in Visa Class A on November 2, 2024 and sell it today you would earn a total of 2,865 from holding Visa Class A or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 84.21% |
| Values | Daily Returns |
Visa Class A vs. Tong Yang Industry
Performance |
| Timeline |
| Visa Class A |
| Tong Yang Industry |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and Tong Yang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Tong Yang
The main advantage of trading using opposite Visa and Tong Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Tong Yang 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 Tong Yang will offset losses from the drop in Tong Yang's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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