Correlation Between Visa and China Railway
Can any of the company-specific risk be diversified away by investing in both Visa and China Railway 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 China Railway 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 China Railway Construction, you can compare the effects of market volatilities on Visa and China Railway 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 China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and China Railway.
Diversification Opportunities for Visa and China Railway
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visa and China is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and China Railway Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Constr 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 China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Constr has no effect on the direction of Visa i.e., Visa and China Railway go up and down completely randomly.
Pair Corralation between Visa and China Railway
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.39 times more return on investment than China Railway. However, Visa Class A is 2.54 times less risky than China Railway. It trades about 0.11 of its potential returns per unit of risk. China Railway Construction is currently generating about 0.02 per unit of risk. If you would invest 26,932 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 4,576 from holding Visa Class A or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.45% |
| Values | Daily Returns |
Visa Class A vs. China Railway Construction
Performance |
| Timeline |
| Visa Class A |
| China Railway Constr |
Visa and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and China Railway
The main advantage of trading using opposite Visa and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, China Railway 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 China Railway will offset losses from the drop in China Railway's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| China Railway vs. CPU SOFTWAREHOUSE | China Railway vs. Magic Software Enterprises | China Railway vs. Japan Medical Dynamic | China Railway vs. Compugroup Medical SE |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |