Correlation Between Visa and Beijing Tong
Can any of the company-specific risk be diversified away by investing in both Visa and Beijing Tong 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 Beijing Tong 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 Beijing Tong Ren, you can compare the effects of market volatilities on Visa and Beijing Tong 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 Beijing Tong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Beijing Tong.
Diversification Opportunities for Visa and Beijing Tong
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Beijing is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Beijing Tong Ren in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Tong Ren 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 Beijing Tong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Tong Ren has no effect on the direction of Visa i.e., Visa and Beijing Tong go up and down completely randomly.
Pair Corralation between Visa and Beijing Tong
Taking into account the 90-day investment horizon Visa is expected to generate 1.89 times less return on investment than Beijing Tong. But when comparing it to its historical volatility, Visa Class A is 3.52 times less risky than Beijing Tong. It trades about 0.09 of its potential returns per unit of risk. Beijing Tong Ren is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 58.00 in Beijing Tong Ren on November 5, 2024 and sell it today you would earn a total of 43.00 from holding Beijing Tong Ren or generate 74.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.6% |
| Values | Daily Returns |
Visa Class A vs. Beijing Tong Ren
Performance |
| Timeline |
| Visa Class A |
| Beijing Tong Ren |
Visa and Beijing Tong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Beijing Tong
The main advantage of trading using opposite Visa and Beijing Tong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Beijing Tong 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 Beijing Tong will offset losses from the drop in Beijing Tong's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Upstart Holdings | Visa vs. Capital One Financial |
| Beijing Tong vs. The Trade Desk | Beijing Tong vs. Solstad Offshore ASA | Beijing Tong vs. WT OFFSHORE | Beijing Tong vs. AEGEAN AIRLINES |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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