Correlation Between Visa and Nien Hsing
Can any of the company-specific risk be diversified away by investing in both Visa and Nien Hsing 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 Nien Hsing 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 Nien Hsing Textile, you can compare the effects of market volatilities on Visa and Nien Hsing 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 Nien Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Nien Hsing.
Diversification Opportunities for Visa and Nien Hsing
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Nien is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Nien Hsing Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nien Hsing Textile 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 Nien Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nien Hsing Textile has no effect on the direction of Visa i.e., Visa and Nien Hsing go up and down completely randomly.
Pair Corralation between Visa and Nien Hsing
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.33 times more return on investment than Nien Hsing. However, Visa is 1.33 times more volatile than Nien Hsing Textile. It trades about 0.1 of its potential returns per unit of risk. Nien Hsing Textile is currently generating about 0.05 per unit of risk. If you would invest 24,113 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 7,395 from holding Visa Class A or generate 30.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.51% |
| Values | Daily Returns |
Visa Class A vs. Nien Hsing Textile
Performance |
| Timeline |
| Visa Class A |
| Nien Hsing Textile |
Visa and Nien Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Nien Hsing
The main advantage of trading using opposite Visa and Nien Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Nien Hsing 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 Nien Hsing will offset losses from the drop in Nien Hsing's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Nien Hsing vs. Tainan Enterprises Co | Nien Hsing vs. De Licacy Industrial | Nien Hsing vs. Taiwan Styrene Monomer | Nien Hsing vs. Kaulin Mfg |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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