Correlation Between Visa and Unilever Indonesia
Can any of the company-specific risk be diversified away by investing in both Visa and Unilever Indonesia 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 Unilever Indonesia 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 Unilever Indonesia Tbk, you can compare the effects of market volatilities on Visa and Unilever Indonesia 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 Unilever Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Unilever Indonesia.
Diversification Opportunities for Visa and Unilever Indonesia
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Unilever is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Unilever Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever Indonesia Tbk 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 Unilever Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever Indonesia Tbk has no effect on the direction of Visa i.e., Visa and Unilever Indonesia go up and down completely randomly.
Pair Corralation between Visa and Unilever Indonesia
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.44 times more return on investment than Unilever Indonesia. However, Visa Class A is 2.27 times less risky than Unilever Indonesia. It trades about 0.1 of its potential returns per unit of risk. Unilever Indonesia Tbk is currently generating about -0.11 per unit of risk. If you would invest 26,960 in Visa Class A on September 12, 2024 and sell it today you would earn a total of 4,278 from holding Visa Class A or generate 15.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Visa Class A vs. Unilever Indonesia Tbk
Performance |
| Timeline |
| Visa Class A |
| Unilever Indonesia Tbk |
Visa and Unilever Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Unilever Indonesia
The main advantage of trading using opposite Visa and Unilever Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Unilever Indonesia 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 Unilever Indonesia will offset losses from the drop in Unilever Indonesia's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Unilever Indonesia vs. Inter Parfums | Unilever Indonesia vs. European Wax Center | Unilever Indonesia vs. Spectrum Brands Holdings | Unilever Indonesia vs. Edgewell Personal Care |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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