Correlation Between Visa and Lion Forest
Can any of the company-specific risk be diversified away by investing in both Visa and Lion Forest 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 Lion Forest 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 Lion Forest Industries, you can compare the effects of market volatilities on Visa and Lion Forest 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 Lion Forest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lion Forest.
Diversification Opportunities for Visa and Lion Forest
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Lion is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lion Forest Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Forest Industries 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 Lion Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Forest Industries has no effect on the direction of Visa i.e., Visa and Lion Forest go up and down completely randomly.
Pair Corralation between Visa and Lion Forest
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.33 times more return on investment than Lion Forest. However, Visa Class A is 3.03 times less risky than Lion Forest. It trades about 0.4 of its potential returns per unit of risk. Lion Forest Industries is currently generating about 0.12 per unit of risk. If you would invest 28,134 in Visa Class A on August 30, 2024 and sell it today you would earn a total of 3,336 from holding Visa Class A or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Visa Class A vs. Lion Forest Industries
Performance |
| Timeline |
| Visa Class A |
| Lion Forest Industries |
Visa and Lion Forest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lion Forest
The main advantage of trading using opposite Visa and Lion Forest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Lion Forest 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 Lion Forest will offset losses from the drop in Lion Forest's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Lion Forest vs. Central Industrial Corp | Lion Forest vs. Alliance Financial Group | Lion Forest vs. Uchi Technologies Bhd | Lion Forest vs. Dataprep Holdings 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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