Correlation Between Visa and Greatek Electronics
Can any of the company-specific risk be diversified away by investing in both Visa and Greatek Electronics 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 Greatek Electronics 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 Greatek Electronics, you can compare the effects of market volatilities on Visa and Greatek Electronics 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 Greatek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Greatek Electronics.
Diversification Opportunities for Visa and Greatek Electronics
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Greatek is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Greatek Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatek Electronics 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 Greatek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatek Electronics has no effect on the direction of Visa i.e., Visa and Greatek Electronics go up and down completely randomly.
Pair Corralation between Visa and Greatek Electronics
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.25 times more return on investment than Greatek Electronics. However, Visa is 1.25 times more volatile than Greatek Electronics. It trades about 0.5 of its potential returns per unit of risk. Greatek Electronics is currently generating about 0.48 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 Together |
| Strength | Weak |
| Accuracy | 73.68% |
| Values | Daily Returns |
Visa Class A vs. Greatek Electronics
Performance |
| Timeline |
| Visa Class A |
| Greatek Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Visa and Greatek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Greatek Electronics
The main advantage of trading using opposite Visa and Greatek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Greatek Electronics 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 Greatek Electronics will offset losses from the drop in Greatek Electronics' 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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