Correlation Between Visa and Song Hong
Can any of the company-specific risk be diversified away by investing in both Visa and Song Hong 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 Song Hong 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 Song Hong Construction, you can compare the effects of market volatilities on Visa and Song Hong 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 Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Song Hong.
Diversification Opportunities for Visa and Song Hong
Excellent diversification
The 3 months correlation between Visa and Song is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Song Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong 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 Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Construction has no effect on the direction of Visa i.e., Visa and Song Hong go up and down completely randomly.
Pair Corralation between Visa and Song Hong
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.34 times more return on investment than Song Hong. However, Visa Class A is 2.91 times less risky than Song Hong. It trades about 0.34 of its potential returns per unit of risk. Song Hong Construction is currently generating about 0.1 per unit of risk. If you would invest 29,018 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 2,490 from holding Visa Class A or generate 8.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Visa Class A vs. Song Hong Construction
Performance |
| Timeline |
| Visa Class A |
| Song Hong Construction |
Visa and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Song Hong
The main advantage of trading using opposite Visa and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Song Hong 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 Song Hong will offset losses from the drop in Song Hong'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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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