Correlation Between Visa and China International
Can any of the company-specific risk be diversified away by investing in both Visa and China International 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 China International 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 China International Marine, you can compare the effects of market volatilities on Visa and China International 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 China International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and China International.
Diversification Opportunities for Visa and China International
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and China is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and China International Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China International 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 China International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China International has no effect on the direction of Visa i.e., Visa and China International go up and down completely randomly.
Pair Corralation between Visa and China International
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.29 times more return on investment than China International. However, Visa Class A is 3.49 times less risky than China International. It trades about 0.16 of its potential returns per unit of risk. China International Marine is currently generating about 0.03 per unit of risk. If you would invest 27,801 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 3,707 from holding Visa Class A or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.97% |
| Values | Daily Returns |
Visa Class A vs. China International Marine
Performance |
| Timeline |
| Visa Class A |
| China International |
Visa and China International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and China International
The main advantage of trading using opposite Visa and China International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, China International 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 China International will offset losses from the drop in China International's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| China International vs. Sumitomo Chemical | China International vs. Silicon Motion Technology | China International vs. National Health Investors | China International vs. FEMALE HEALTH |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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