Correlation Between Visa and Long Bon
Can any of the company-specific risk be diversified away by investing in both Visa and Long Bon 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 Long Bon 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 Long Bon International, you can compare the effects of market volatilities on Visa and Long Bon 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 Long Bon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Long Bon.
Diversification Opportunities for Visa and Long Bon
Good diversification
The 3 months correlation between Visa and Long is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Long Bon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Bon International 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 Long Bon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Bon International has no effect on the direction of Visa i.e., Visa and Long Bon go up and down completely randomly.
Pair Corralation between Visa and Long Bon
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.58 times more return on investment than Long Bon. However, Visa Class A is 1.71 times less risky than Long Bon. It trades about 0.1 of its potential returns per unit of risk. Long Bon International is currently generating about 0.04 per unit of risk. If you would invest 21,671 in Visa Class A on December 11, 2024 and sell it today you would earn a total of 12,477 from holding Visa Class A or generate 57.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.57% |
| Values | Daily Returns |
Visa Class A vs. Long Bon International
Performance |
| Timeline |
| Visa Class A |
| Long Bon International |
Visa and Long Bon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Long Bon
The main advantage of trading using opposite Visa and Long Bon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Long Bon 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 Long Bon will offset losses from the drop in Long Bon's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Long Bon vs. Hung Sheng Construction | Long Bon vs. Kee Tai Properties | Long Bon vs. BES Engineering Co | Long Bon vs. Chainqui Construction Development |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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