Correlation Between Visa and New Asia
Can any of the company-specific risk be diversified away by investing in both Visa and New Asia 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 New Asia 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 New Asia Holdings, you can compare the effects of market volatilities on Visa and New Asia 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 New Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and New Asia.
Diversification Opportunities for Visa and New Asia
Pay attention - limited upside
The 3 months correlation between Visa and New is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and New Asia Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Asia Holdings 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 New Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Asia Holdings has no effect on the direction of Visa i.e., Visa and New Asia go up and down completely randomly.
Pair Corralation between Visa and New Asia
Taking into account the 90-day investment horizon Visa is expected to generate 30.6 times less return on investment than New Asia. But when comparing it to its historical volatility, Visa Class A is 43.47 times less risky than New Asia. It trades about 0.08 of its potential returns per unit of risk. New Asia Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 32.00 in New Asia Holdings on August 29, 2024 and sell it today you would lose (28.51) from holding New Asia Holdings or give up 89.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. New Asia Holdings
Performance |
| Timeline |
| Visa Class A |
| New Asia Holdings |
Visa and New Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and New Asia
The main advantage of trading using opposite Visa and New Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, New Asia 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 New Asia will offset losses from the drop in New Asia's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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