Correlation Between Visa and KABE Group
Can any of the company-specific risk be diversified away by investing in both Visa and KABE Group 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 KABE Group 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 KABE Group AB, you can compare the effects of market volatilities on Visa and KABE Group 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 KABE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and KABE Group.
Diversification Opportunities for Visa and KABE Group
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and KABE is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and KABE Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KABE Group AB 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 KABE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KABE Group AB has no effect on the direction of Visa i.e., Visa and KABE Group go up and down completely randomly.
Pair Corralation between Visa and KABE Group
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.62 times more return on investment than KABE Group. However, Visa Class A is 1.62 times less risky than KABE Group. It trades about 0.44 of its potential returns per unit of risk. KABE Group AB is currently generating about 0.01 per unit of risk. If you would invest 31,440 in Visa Class A on November 3, 2024 and sell it today you would earn a total of 2,740 from holding Visa Class A or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. KABE Group AB
Performance |
| Timeline |
| Visa Class A |
| KABE Group AB |
Visa and KABE Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and KABE Group
The main advantage of trading using opposite Visa and KABE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, KABE Group 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 KABE Group will offset losses from the drop in KABE Group's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| KABE Group vs. Byggmax Group AB | KABE Group vs. Svedbergs i Dalstorp | KABE Group vs. Inwido AB | KABE Group vs. New Wave Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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