Correlation Between Sentage Holdings and Visa

Can any of the company-specific risk be diversified away by investing in both Sentage Holdings and Visa 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 Sentage Holdings and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sentage Holdings and Visa Class A, you can compare the effects of market volatilities on Sentage Holdings and Visa 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 Sentage Holdings with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentage Holdings and Visa.

Diversification Opportunities for Sentage Holdings and Visa

-0.66

Correlation Coefficient

Sentage Holdings  Visa

Excellent diversification

The 3 months correlation between Sentage and Visa is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sentage Holdings and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and Sentage Holdings 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 Sentage Holdings are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Sentage Holdings i.e., Sentage Holdings and Visa go up and down completely randomly.

Pair Corralation between Sentage Holdings and Visa

Given the investment horizon of 90 days Sentage Holdings is expected to generate 12.26 times more return on investment than Visa. However, Sentage Holdings is 12.26 times more volatile than Visa Class A. It trades about 0.04 of its potential returns per unit of risk. Visa Class A is currently generating about 0.08 per unit of risk. If you would invest  242.00  in Sentage Holdings on September 3, 2024 and sell it today you would lose (41.00) from holding Sentage Holdings or give up 16.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sentage Holdings  vs.  Visa Class A

Sentage Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentage Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sentage Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Visa Class A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sentage Holdings and Visa

The main advantage of trading using opposite Sentage Holdings and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentage Holdings position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.

The idea behind Sentage Holdings and Visa Class A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.