Correlation Between Visa and Asia Vital
Can any of the company-specific risk be diversified away by investing in both Visa and Asia Vital 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 Asia Vital 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 Asia Vital Components, you can compare the effects of market volatilities on Visa and Asia Vital 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 Asia Vital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Asia Vital.
Diversification Opportunities for Visa and Asia Vital
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Asia is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Asia Vital Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Vital Components 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 Asia Vital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Vital Components has no effect on the direction of Visa i.e., Visa and Asia Vital go up and down completely randomly.
Pair Corralation between Visa and Asia Vital
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.2 times more return on investment than Asia Vital. However, Visa Class A is 5.05 times less risky than Asia Vital. It trades about 0.57 of its potential returns per unit of risk. Asia Vital Components is currently generating about -0.21 per unit of risk. If you would invest 31,304 in Visa Class A on November 7, 2024 and sell it today you would earn a total of 3,640 from holding Visa Class A or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Visa Class A vs. Asia Vital Components
Performance |
| Timeline |
| Visa Class A |
| Asia Vital Components |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and Asia Vital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Asia Vital
The main advantage of trading using opposite Visa and Asia Vital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Asia Vital 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 Asia Vital will offset losses from the drop in Asia Vital's long position.| Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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