Correlation Between Visa and Kaimei Electronic
Can any of the company-specific risk be diversified away by investing in both Visa and Kaimei Electronic 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 Kaimei Electronic 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 Kaimei Electronic Corp, you can compare the effects of market volatilities on Visa and Kaimei Electronic 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 Kaimei Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Kaimei Electronic.
Diversification Opportunities for Visa and Kaimei Electronic
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Kaimei is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Kaimei Electronic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaimei Electronic Corp 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 Kaimei Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaimei Electronic Corp has no effect on the direction of Visa i.e., Visa and Kaimei Electronic go up and down completely randomly.
Pair Corralation between Visa and Kaimei Electronic
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.74 times more return on investment than Kaimei Electronic. However, Visa Class A is 1.34 times less risky than Kaimei Electronic. It trades about 0.16 of its potential returns per unit of risk. Kaimei Electronic Corp is currently generating about -0.02 per unit of risk. If you would invest 27,801 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 3,707 from holding Visa Class A or generate 13.33% 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. Kaimei Electronic Corp
Performance |
| Timeline |
| Visa Class A |
| Kaimei Electronic Corp |
Visa and Kaimei Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Kaimei Electronic
The main advantage of trading using opposite Visa and Kaimei Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Kaimei Electronic 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 Kaimei Electronic will offset losses from the drop in Kaimei Electronic'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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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