Correlation Between Visa and KENGEN PLC

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Can any of the company-specific risk be diversified away by investing in both Visa and KENGEN PLC 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 KENGEN PLC 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 KENGEN PLC, you can compare the effects of market volatilities on Visa and KENGEN PLC 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 KENGEN PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and KENGEN PLC.

Diversification Opportunities for Visa and KENGEN PLC

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Visa and KENGEN is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and KENGEN PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENGEN PLC 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 KENGEN PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENGEN PLC has no effect on the direction of Visa i.e., Visa and KENGEN PLC go up and down completely randomly.

Pair Corralation between Visa and KENGEN PLC

Taking into account the 90-day investment horizon Visa is expected to generate 1.37 times less return on investment than KENGEN PLC. But when comparing it to its historical volatility, Visa Class A is 2.5 times less risky than KENGEN PLC. It trades about 0.44 of its potential returns per unit of risk. KENGEN PLC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  375.00  in KENGEN PLC on November 3, 2024 and sell it today you would earn a total of  46.00  from holding KENGEN PLC or generate 12.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Visa Class A  vs.  KENGEN PLC

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.
KENGEN PLC 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in KENGEN PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, KENGEN PLC may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Visa and KENGEN PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and KENGEN PLC

The main advantage of trading using opposite Visa and KENGEN PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, KENGEN PLC 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 KENGEN PLC will offset losses from the drop in KENGEN PLC's long position.
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The idea behind Visa Class A and KENGEN PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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