Correlation Between Visa and Bakrieland Development
Can any of the company-specific risk be diversified away by investing in both Visa and Bakrieland Development 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 Bakrieland Development 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 Bakrieland Development Tbk, you can compare the effects of market volatilities on Visa and Bakrieland Development 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 Bakrieland Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Bakrieland Development.
Diversification Opportunities for Visa and Bakrieland Development
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Bakrieland is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bakrieland Development Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakrieland Development 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 Bakrieland Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakrieland Development has no effect on the direction of Visa i.e., Visa and Bakrieland Development go up and down completely randomly.
Pair Corralation between Visa and Bakrieland Development
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.17 times more return on investment than Bakrieland Development. However, Visa Class A is 5.91 times less risky than Bakrieland Development. It trades about 0.08 of its potential returns per unit of risk. Bakrieland Development Tbk is currently generating about -0.06 per unit of risk. If you would invest 27,727 in Visa Class A on November 3, 2024 and sell it today you would earn a total of 6,453 from holding Visa Class A or generate 23.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.74% |
| Values | Daily Returns |
Visa Class A vs. Bakrieland Development Tbk
Performance |
| Timeline |
| Visa Class A |
| Bakrieland Development |
Visa and Bakrieland Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Bakrieland Development
The main advantage of trading using opposite Visa and Bakrieland Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Bakrieland Development 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 Bakrieland Development will offset losses from the drop in Bakrieland Development's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Bakrieland Development vs. Bakrie Brothers Tbk | Bakrieland Development vs. Bakrie Sumatera Plantations | Bakrieland Development vs. Energi Mega Persada | Bakrieland Development vs. Darma Henwa Tbk |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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