Correlation Between Visa and Southern Steel
Can any of the company-specific risk be diversified away by investing in both Visa and Southern Steel 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 Southern Steel 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 Southern Steel Bhd, you can compare the effects of market volatilities on Visa and Southern Steel 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 Southern Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Southern Steel.
Diversification Opportunities for Visa and Southern Steel
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Southern is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Southern Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Steel Bhd 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 Southern Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Steel Bhd has no effect on the direction of Visa i.e., Visa and Southern Steel go up and down completely randomly.
Pair Corralation between Visa and Southern Steel
Taking into account the 90-day investment horizon Visa is expected to generate 1.02 times less return on investment than Southern Steel. But when comparing it to its historical volatility, Visa Class A is 3.73 times less risky than Southern Steel. It trades about 0.1 of its potential returns per unit of risk. Southern Steel Bhd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Southern Steel Bhd on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Southern Steel Bhd or generate 14.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.13% |
| Values | Daily Returns |
Visa Class A vs. Southern Steel Bhd
Performance |
| Timeline |
| Visa Class A |
| Southern Steel Bhd |
Visa and Southern Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Southern Steel
The main advantage of trading using opposite Visa and Southern Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Southern Steel 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 Southern Steel will offset losses from the drop in Southern Steel's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Southern Steel vs. Pantech Group Holdings | Southern Steel vs. Coraza Integrated Technology | Southern Steel vs. Choo Bee Metal | Southern Steel vs. Eonmetall Group Bhd |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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