Correlation Between Visa and PT Steel
Can any of the company-specific risk be diversified away by investing in both Visa and PT Steel 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 PT Steel 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 PT Steel Pipe, you can compare the effects of market volatilities on Visa and PT Steel 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 PT Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and PT Steel.
Diversification Opportunities for Visa and PT Steel
Pay attention - limited upside
The 3 months correlation between Visa and S08 is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and PT Steel Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Steel Pipe 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 PT Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Steel Pipe has no effect on the direction of Visa i.e., Visa and PT Steel go up and down completely randomly.
Pair Corralation between Visa and PT Steel
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.31 times more return on investment than PT Steel. However, Visa Class A is 3.24 times less risky than PT Steel. It trades about 0.18 of its potential returns per unit of risk. PT Steel Pipe is currently generating about -0.03 per unit of risk. If you would invest 27,801 in Visa Class A on November 2, 2024 and sell it today you would earn a total of 6,504 from holding Visa Class A or generate 23.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. PT Steel Pipe
Performance |
| Timeline |
| Visa Class A |
| PT Steel Pipe |
Visa and PT Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and PT Steel
The main advantage of trading using opposite Visa and PT Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, PT Steel 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 PT Steel will offset losses from the drop in PT Steel's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| PT Steel vs. HANOVER INSURANCE | PT Steel vs. United Insurance Holdings | PT Steel vs. CITY OFFICE REIT | PT Steel vs. Corporate Office Properties |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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