Correlation Between Visa and SIM Technology
Can any of the company-specific risk be diversified away by investing in both Visa and SIM Technology 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 SIM Technology 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 SIM Technology Group, you can compare the effects of market volatilities on Visa and SIM Technology 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 SIM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SIM Technology.
Diversification Opportunities for Visa and SIM Technology
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and SIM is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SIM Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIM Technology Group 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 SIM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIM Technology Group has no effect on the direction of Visa i.e., Visa and SIM Technology go up and down completely randomly.
Pair Corralation between Visa and SIM Technology
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.52 times more return on investment than SIM Technology. However, Visa Class A is 1.91 times less risky than SIM Technology. It trades about 0.28 of its potential returns per unit of risk. SIM Technology Group is currently generating about 0.0 per unit of risk. If you would invest 27,633 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 3,875 from holding Visa Class A or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. SIM Technology Group
Performance |
| Timeline |
| Visa Class A |
| SIM Technology Group |
Visa and SIM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SIM Technology
The main advantage of trading using opposite Visa and SIM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, SIM Technology 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 SIM Technology will offset losses from the drop in SIM Technology's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| SIM Technology vs. Accton Technology Corp | SIM Technology vs. Wistron NeWeb Corp | SIM Technology vs. Alpha Networks | SIM Technology vs. Gemtek Technology Co |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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