Correlation Between Visa and China Steel
Can any of the company-specific risk be diversified away by investing in both Visa and China Steel 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 China Steel 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 China Steel Structure, you can compare the effects of market volatilities on Visa and China Steel 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 China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and China Steel.
Diversification Opportunities for Visa and China Steel
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and China is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and China Steel Structure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Steel Structure 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 China Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Steel Structure has no effect on the direction of Visa i.e., Visa and China Steel go up and down completely randomly.
Pair Corralation between Visa and China Steel
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.46 times more return on investment than China Steel. However, Visa is 1.46 times more volatile than China Steel Structure. It trades about 0.12 of its potential returns per unit of risk. China Steel Structure is currently generating about -0.5 per unit of risk. If you would invest 31,319 in Visa Class A on September 25, 2024 and sell it today you would earn a total of 746.00 from holding Visa Class A or generate 2.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Visa Class A vs. China Steel Structure
Performance |
Timeline |
Visa Class A |
China Steel Structure |
Visa and China Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and China Steel
The main advantage of trading using opposite Visa and China Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, China Steel 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 China Steel will offset losses from the drop in China Steel's long position.Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
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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 Stocks Directory module to find actively traded stocks across global markets.
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