Correlation Between Visa and East Money

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Can any of the company-specific risk be diversified away by investing in both Visa and East Money 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 East Money 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 East Money Information, you can compare the effects of market volatilities on Visa and East Money 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 East Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and East Money.

Diversification Opportunities for Visa and East Money

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Visa and East is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and East Money Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Money Information 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 East Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Money Information has no effect on the direction of Visa i.e., Visa and East Money go up and down completely randomly.

Pair Corralation between Visa and East Money

Taking into account the 90-day investment horizon Visa is expected to generate 2.08 times less return on investment than East Money. But when comparing it to its historical volatility, Visa Class A is 4.39 times less risky than East Money. It trades about 0.35 of its potential returns per unit of risk. East Money Information is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,319  in East Money Information on September 1, 2024 and sell it today you would earn a total of  407.00  from holding East Money Information or generate 17.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Visa Class A  vs.  East Money Information

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.
East Money Information 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in East Money Information are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, East Money sustained solid returns over the last few months and may actually be approaching a breakup point.

Visa and East Money Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and East Money

The main advantage of trading using opposite Visa and East Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, East Money 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 East Money will offset losses from the drop in East Money's long position.
The idea behind Visa Class A and East Money Information pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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