Correlation Between Visa and Nippon Paint
Can any of the company-specific risk be diversified away by investing in both Visa and Nippon Paint 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 Nippon Paint 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 Nippon Paint Holdings, you can compare the effects of market volatilities on Visa and Nippon Paint 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 Nippon Paint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Nippon Paint.
Diversification Opportunities for Visa and Nippon Paint
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Nippon is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Nippon Paint Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Paint 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 Nippon Paint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Paint Holdings has no effect on the direction of Visa i.e., Visa and Nippon Paint go up and down completely randomly.
Pair Corralation between Visa and Nippon Paint
Taking into account the 90-day investment horizon Visa is expected to generate 3.05 times less return on investment than Nippon Paint. But when comparing it to its historical volatility, Visa Class A is 10.01 times less risky than Nippon Paint. It trades about 0.14 of its potential returns per unit of risk. Nippon Paint Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 350.00 in Nippon Paint Holdings on September 15, 2024 and sell it today you would earn a total of 3.00 from holding Nippon Paint Holdings or generate 0.86% 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. Nippon Paint Holdings
Performance |
| Timeline |
| Visa Class A |
| Nippon Paint Holdings |
Visa and Nippon Paint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Nippon Paint
The main advantage of trading using opposite Visa and Nippon Paint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Nippon Paint 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 Nippon Paint will offset losses from the drop in Nippon Paint's long position.The idea behind Visa Class A and Nippon Paint Holdings 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.| Nippon Paint vs. Delek Logistics Partners | Nippon Paint vs. Pentair PLC | Nippon Paint vs. TFI International | Nippon Paint vs. Yuexiu Transport Infrastructure |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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