Correlation Between Visa and Jinhui Mining

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

Diversification Opportunities for Visa and Jinhui Mining

0.4

Correlation Coefficient

Visa  Jinhui Mining

Very weak diversification

The 3 months correlation between Visa and Jinhui is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Jinhui Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinhui Mining 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 Jinhui Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinhui Mining has no effect on the direction of Visa i.e., Visa and Jinhui Mining go up and down completely randomly.

Pair Corralation between Visa and Jinhui Mining

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.52 times more return on investment than Jinhui Mining. However, Visa Class A is 1.94 times less risky than Jinhui Mining. It trades about 0.16 of its potential returns per unit of risk. Jinhui Mining Co is currently generating about 0.08 per unit of risk. If you would invest  27,801  in Visa Class A on September 1, 2024 and sell it today you would earn a total of  3,707  from holding Visa Class A or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.06%
Values	Daily Returns

Visa Class A  vs.  Jinhui Mining Co

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.

Jinhui Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jinhui Mining Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinhui Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Jinhui Mining

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

The idea behind Visa Class A and Jinhui Mining Co 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 Anywhere module to track or share privately all of your investments from the convenience of any device.