Correlation Between Visa and Petronas Chemicals
Can any of the company-specific risk be diversified away by investing in both Visa and Petronas Chemicals 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 Petronas Chemicals 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 Petronas Chemicals Group, you can compare the effects of market volatilities on Visa and Petronas Chemicals 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 Petronas Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Petronas Chemicals.
Diversification Opportunities for Visa and Petronas Chemicals
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Petronas is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Petronas Chemicals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronas Chemicals 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 Petronas Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petronas Chemicals has no effect on the direction of Visa i.e., Visa and Petronas Chemicals go up and down completely randomly.
Pair Corralation between Visa and Petronas Chemicals
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.74 times more return on investment than Petronas Chemicals. However, Visa Class A is 1.35 times less risky than Petronas Chemicals. It trades about 0.49 of its potential returns per unit of risk. Petronas Chemicals Group is currently generating about -0.15 per unit of risk. If you would invest 31,440 in Visa Class A on November 2, 2024 and sell it today you would earn a total of 2,865 from holding Visa Class A or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Visa Class A vs. Petronas Chemicals Group
Performance |
| Timeline |
| Visa Class A |
| Petronas Chemicals |
Visa and Petronas Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Petronas Chemicals
The main advantage of trading using opposite Visa and Petronas Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Petronas Chemicals 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 Petronas Chemicals will offset losses from the drop in Petronas Chemicals' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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