Correlation Between Visa and KG Eco

Can any of the company-specific risk be diversified away by investing in both Visa and KG Eco 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 KG Eco 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 KG Eco Technology, you can compare the effects of market volatilities on Visa and KG Eco 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 KG Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and KG Eco.

Diversification Opportunities for Visa and KG Eco

-0.72

Correlation Coefficient

Visa  KG Eco

Pay attention - limited upside

The 3 months correlation between Visa and 151860 is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco Technology 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 KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of Visa i.e., Visa and KG Eco go up and down completely randomly.

Pair Corralation between Visa and KG Eco

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.27 times more return on investment than KG Eco. However, Visa Class A is 3.68 times less risky than KG Eco. It trades about 0.09 of its potential returns per unit of risk. KG Eco Technology is currently generating about -0.02 per unit of risk. If you would invest  20,470  in Visa Class A on September 5, 2024 and sell it today you would earn a total of  10,831  from holding Visa Class A or generate 52.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.17%
Values	Daily Returns

Visa Class A  vs.  KG Eco Technology

Visa Class A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KG Eco Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KG Eco Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Visa and KG Eco

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

The idea behind Visa Class A and KG Eco Technology 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..