Correlation Between Visa and Shangri-La Asia
Can any of the company-specific risk be diversified away by investing in both Visa and Shangri-La Asia 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 Shangri-La Asia 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 Shangri La Asia Limited, you can compare the effects of market volatilities on Visa and Shangri-La Asia 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 Shangri-La Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Shangri-La Asia.
Diversification Opportunities for Visa and Shangri-La Asia
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Shangri-La is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Shangri La Asia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Asia 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 Shangri-La Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Asia has no effect on the direction of Visa i.e., Visa and Shangri-La Asia go up and down completely randomly.
Pair Corralation between Visa and Shangri-La Asia
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.4 times more return on investment than Shangri-La Asia. However, Visa Class A is 2.47 times less risky than Shangri-La Asia. It trades about 0.08 of its potential returns per unit of risk. Shangri La Asia Limited is currently generating about 0.01 per unit of risk. If you would invest 21,128 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 10,380 from holding Visa Class A or generate 49.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 58.38% |
| Values | Daily Returns |
Visa Class A vs. Shangri La Asia Limited
Performance |
| Timeline |
| Visa Class A |
| Shangri La Asia |
Visa and Shangri-La Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Shangri-La Asia
The main advantage of trading using opposite Visa and Shangri-La Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Shangri-La Asia 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 Shangri-La Asia will offset losses from the drop in Shangri-La Asia's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Shangri-La Asia vs. Marriott International | Shangri-La Asia vs. Hilton Worldwide Holdings | Shangri-La Asia vs. InterContinental Hotels Group | Shangri-La Asia vs. InterContinental Hotels Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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