Correlation Between Visa and Tong Hsing
Can any of the company-specific risk be diversified away by investing in both Visa and Tong Hsing 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 Tong Hsing 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 Tong Hsing Electronic, you can compare the effects of market volatilities on Visa and Tong Hsing 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 Tong Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Tong Hsing.
Diversification Opportunities for Visa and Tong Hsing
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and Tong is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Tong Hsing Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Hsing Electronic 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 Tong Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Hsing Electronic has no effect on the direction of Visa i.e., Visa and Tong Hsing go up and down completely randomly.
Pair Corralation between Visa and Tong Hsing
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.58 times more return on investment than Tong Hsing. However, Visa Class A is 1.72 times less risky than Tong Hsing. It trades about 0.21 of its potential returns per unit of risk. Tong Hsing Electronic is currently generating about -0.06 per unit of risk. If you would invest 28,365 in Visa Class A on October 26, 2024 and sell it today you would earn a total of 3,991 from holding Visa Class A or generate 14.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.65% |
| Values | Daily Returns |
Visa Class A vs. Tong Hsing Electronic
Performance |
| Timeline |
| Visa Class A |
| Tong Hsing Electronic |
Visa and Tong Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Tong Hsing
The main advantage of trading using opposite Visa and Tong Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Tong Hsing 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 Tong Hsing will offset losses from the drop in Tong Hsing's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Tong Hsing vs. Kinsus Interconnect Technology | Tong Hsing vs. Unimicron Technology Corp | Tong Hsing vs. Nan Ya Printed | Tong Hsing vs. WIN Semiconductors |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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