Correlation Between Visa and Overseas Chinese
Can any of the company-specific risk be diversified away by investing in both Visa and Overseas Chinese 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 Overseas Chinese 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 Overseas Chinese Banking, you can compare the effects of market volatilities on Visa and Overseas Chinese 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 Overseas Chinese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Overseas Chinese.
Diversification Opportunities for Visa and Overseas Chinese
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Overseas is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Overseas Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overseas Chinese Banking 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 Overseas Chinese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overseas Chinese Banking has no effect on the direction of Visa i.e., Visa and Overseas Chinese go up and down completely randomly.
Pair Corralation between Visa and Overseas Chinese
Taking into account the 90-day investment horizon Visa is expected to generate 1.07 times less return on investment than Overseas Chinese. But when comparing it to its historical volatility, Visa Class A is 1.21 times less risky than Overseas Chinese. It trades about 0.07 of its potential returns per unit of risk. Overseas Chinese Banking is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,744 in Overseas Chinese Banking on October 21, 2024 and sell it today you would earn a total of 762.00 from holding Overseas Chinese Banking or generate 43.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Overseas Chinese Banking
Performance |
| Timeline |
| Visa Class A |
| Overseas Chinese Banking |
Visa and Overseas Chinese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Overseas Chinese
The main advantage of trading using opposite Visa and Overseas Chinese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Overseas Chinese 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 Overseas Chinese will offset losses from the drop in Overseas Chinese's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Overseas Chinese vs. Swedbank AB | Overseas Chinese vs. KBC Groep NV | Overseas Chinese vs. Nordea Bank Abp | Overseas Chinese vs. DBS Group Holdings |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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