Correlation Between Visa and Binh Duong
Can any of the company-specific risk be diversified away by investing in both Visa and Binh Duong 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 Binh Duong 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 Binh Duong Construction, you can compare the effects of market volatilities on Visa and Binh Duong 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 Binh Duong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Binh Duong.
Diversification Opportunities for Visa and Binh Duong
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Binh is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Binh Duong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Duong Construction 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 Binh Duong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Duong Construction has no effect on the direction of Visa i.e., Visa and Binh Duong go up and down completely randomly.
Pair Corralation between Visa and Binh Duong
Taking into account the 90-day investment horizon Visa is expected to generate 1.99 times less return on investment than Binh Duong. But when comparing it to its historical volatility, Visa Class A is 1.37 times less risky than Binh Duong. It trades about 0.35 of its potential returns per unit of risk. Binh Duong Construction is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 580,000 in Binh Duong Construction on September 1, 2024 and sell it today you would earn a total of 113,000 from holding Binh Duong Construction or generate 19.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Binh Duong Construction
Performance |
| Timeline |
| Visa Class A |
| Binh Duong Construction |
Visa and Binh Duong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Binh Duong
The main advantage of trading using opposite Visa and Binh Duong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Binh Duong 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 Binh Duong will offset losses from the drop in Binh Duong's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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