Correlation Between Visa and Chung Hsin
Can any of the company-specific risk be diversified away by investing in both Visa and Chung Hsin 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 Chung Hsin 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 Chung Hsin Electric Machinery, you can compare the effects of market volatilities on Visa and Chung Hsin 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 Chung Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Chung Hsin.
Diversification Opportunities for Visa and Chung Hsin
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Chung is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Chung Hsin Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hsin Electric 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 Chung Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hsin Electric has no effect on the direction of Visa i.e., Visa and Chung Hsin go up and down completely randomly.
Pair Corralation between Visa and Chung Hsin
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.55 times more return on investment than Chung Hsin. However, Visa Class A is 1.83 times less risky than Chung Hsin. It trades about 0.5 of its potential returns per unit of risk. Chung Hsin Electric Machinery is currently generating about -0.07 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 Against |
| Strength | Very Weak |
| Accuracy | 73.68% |
| Values | Daily Returns |
Visa Class A vs. Chung Hsin Electric Machinery
Performance |
| Timeline |
| Visa Class A |
| Chung Hsin Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and Chung Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Chung Hsin
The main advantage of trading using opposite Visa and Chung Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Chung Hsin 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 Chung Hsin will offset losses from the drop in Chung Hsin'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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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