Correlation Between Visa and Shin Kong
Can any of the company-specific risk be diversified away by investing in both Visa and Shin Kong 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 Shin Kong 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 Shin Kong Financial, you can compare the effects of market volatilities on Visa and Shin Kong 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 Shin Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Shin Kong.
Diversification Opportunities for Visa and Shin Kong
Excellent diversification
The 3 months correlation between Visa and Shin is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Shin Kong Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Kong Financial 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 Shin Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Kong Financial has no effect on the direction of Visa i.e., Visa and Shin Kong go up and down completely randomly.
Pair Corralation between Visa and Shin Kong
Taking into account the 90-day investment horizon Visa is expected to generate 2.3 times less return on investment than Shin Kong. But when comparing it to its historical volatility, Visa Class A is 1.06 times less risky than Shin Kong. It trades about 0.08 of its potential returns per unit of risk. Shin Kong Financial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,575 in Shin Kong Financial on September 3, 2024 and sell it today you would earn a total of 965.00 from holding Shin Kong Financial or generate 37.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Visa Class A vs. Shin Kong Financial
Performance |
| Timeline |
| Visa Class A |
| Shin Kong Financial |
Visa and Shin Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Shin Kong
The main advantage of trading using opposite Visa and Shin Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Shin Kong 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 Shin Kong will offset losses from the drop in Shin Kong's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Shin Kong vs. Lien Chang Electronic | Shin Kong vs. GameSparcs Co | Shin Kong vs. ABC Taiwan Electronics | Shin Kong vs. International Games System |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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