Correlation Between Visa and Capital Financial
Can any of the company-specific risk be diversified away by investing in both Visa and Capital Financial 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 Capital Financial 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 Capital Financial Indonesia, you can compare the effects of market volatilities on Visa and Capital Financial 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 Capital Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Capital Financial.
Diversification Opportunities for Visa and Capital Financial
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Capital is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Capital Financial Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Financial 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 Capital Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Financial has no effect on the direction of Visa i.e., Visa and Capital Financial go up and down completely randomly.
Pair Corralation between Visa and Capital Financial
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.43 times more return on investment than Capital Financial. However, Visa Class A is 2.35 times less risky than Capital Financial. It trades about 0.08 of its potential returns per unit of risk. Capital Financial Indonesia is currently generating about -0.02 per unit of risk. If you would invest 21,038 in Visa Class A on August 25, 2024 and sell it today you would earn a total of 9,954 from holding Visa Class A or generate 47.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.57% |
| Values | Daily Returns |
Visa Class A vs. Capital Financial Indonesia
Performance |
| Timeline |
| Visa Class A |
| Capital Financial |
Visa and Capital Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Capital Financial
The main advantage of trading using opposite Visa and Capital Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Capital Financial 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 Capital Financial will offset losses from the drop in Capital Financial's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Capital Financial vs. Paninvest Tbk | Capital Financial vs. Maskapai Reasuransi Indonesia | Capital Financial vs. Panin Sekuritas Tbk | Capital Financial vs. Wahana Ottomitra Multiartha |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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