Correlation Between Visa and PETRONAS Gas
Can any of the company-specific risk be diversified away by investing in both Visa and PETRONAS Gas 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 PETRONAS Gas 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 PETRONAS Gas Berhad, you can compare the effects of market volatilities on Visa and PETRONAS Gas 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 PETRONAS Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and PETRONAS Gas.
Diversification Opportunities for Visa and PETRONAS Gas
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and PETRONAS is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and PETRONAS Gas Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PETRONAS Gas Berhad 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 PETRONAS Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PETRONAS Gas Berhad has no effect on the direction of Visa i.e., Visa and PETRONAS Gas go up and down completely randomly.
Pair Corralation between Visa and PETRONAS Gas
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.39 times more return on investment than PETRONAS Gas. However, Visa Class A is 2.54 times less risky than PETRONAS Gas. It trades about 0.06 of its potential returns per unit of risk. PETRONAS Gas Berhad is currently generating about 0.01 per unit of risk. If you would invest 22,905 in Visa Class A on January 8, 2025 and sell it today you would earn a total of 8,408 from holding Visa Class A or generate 36.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 19.23% |
| Values | Daily Returns |
Visa Class A vs. PETRONAS Gas Berhad
Performance |
| Timeline |
| Visa Class A |
| PETRONAS Gas Berhad |
Visa and PETRONAS Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and PETRONAS Gas
The main advantage of trading using opposite Visa and PETRONAS Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, PETRONAS Gas 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 PETRONAS Gas will offset losses from the drop in PETRONAS Gas' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| PETRONAS Gas vs. NRG Energy | PETRONAS Gas vs. Antero Midstream Partners | PETRONAS Gas vs. One Gas | PETRONAS Gas vs. Virgin Group Acquisition |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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