Correlation Between Visa and Shanghai Laimu

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

Diversification Opportunities for Visa and Shanghai Laimu

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Visa and Shanghai is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Shanghai Laimu Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Laimu Elect 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 Shanghai Laimu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Laimu Elect has no effect on the direction of Visa i.e., Visa and Shanghai Laimu go up and down completely randomly.

Pair Corralation between Visa and Shanghai Laimu

Taking into account the 90-day investment horizon Visa is expected to generate 2.08 times less return on investment than Shanghai Laimu. But when comparing it to its historical volatility, Visa Class A is 3.71 times less risky than Shanghai Laimu. It trades about 0.07 of its potential returns per unit of risk. Shanghai Laimu Electronics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  810.00  in Shanghai Laimu Electronics on September 12, 2024 and sell it today you would earn a total of  14.00  from holding Shanghai Laimu Electronics or generate 1.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.65%
ValuesDaily Returns

Visa Class A  vs.  Shanghai Laimu Electronics

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Shanghai Laimu Elect 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Laimu Electronics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Laimu sustained solid returns over the last few months and may actually be approaching a breakup point.

Visa and Shanghai Laimu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Shanghai Laimu

The main advantage of trading using opposite Visa and Shanghai Laimu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Shanghai Laimu 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 Shanghai Laimu will offset losses from the drop in Shanghai Laimu's long position.
The idea behind Visa Class A and Shanghai Laimu Electronics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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