Correlation Between Visa and OSB GROUP

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

Diversification Opportunities for Visa and OSB GROUP

0.44

Correlation Coefficient

Visa  OSB GROUP

Very weak diversification

The 3 months correlation between Visa and OSB is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and OSB GROUP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSB GROUP PLC 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 OSB GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSB GROUP PLC has no effect on the direction of Visa i.e., Visa and OSB GROUP go up and down completely randomly.

Pair Corralation between Visa and OSB GROUP

Taking into account the 90-day investment horizon Visa is expected to generate 2.38 times less return on investment than OSB GROUP. But when comparing it to its historical volatility, Visa Class A is 2.93 times less risky than OSB GROUP. It trades about 0.07 of its potential returns per unit of risk. OSB GROUP PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  458.00  in OSB GROUP PLC on September 26, 2024 and sell it today you would earn a total of  12.00  from holding OSB GROUP PLC or generate 2.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Visa Class A  vs.  OSB GROUP PLC

Visa Class A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) 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.

OSB GROUP PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OSB GROUP PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, OSB GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and OSB GROUP

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

The idea behind Visa Class A and OSB GROUP PLC 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.