Correlation Between Visa and SEAZEN GROUP

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

Diversification Opportunities for Visa and SEAZEN GROUP

-0.39

Correlation Coefficient

Visa  SEAZEN GROUP

Very good diversification

The 3 months correlation between Visa and SEAZEN is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SEAZEN GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEAZEN GROUP LTD 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 SEAZEN GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEAZEN GROUP LTD has no effect on the direction of Visa i.e., Visa and SEAZEN GROUP go up and down completely randomly.

Pair Corralation between Visa and SEAZEN GROUP

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.21 times more return on investment than SEAZEN GROUP. However, Visa Class A is 4.77 times less risky than SEAZEN GROUP. It trades about 0.09 of its potential returns per unit of risk. SEAZEN GROUP LTD is currently generating about 0.01 per unit of risk. If you would invest  20,419  in Visa Class A on September 23, 2024 and sell it today you would earn a total of  11,352  from holding Visa Class A or generate 55.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.03%
Values	Daily Returns

Visa Class A  vs.  SEAZEN GROUP LTD

Visa Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SEAZEN GROUP LTD

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SEAZEN GROUP LTD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, SEAZEN GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and SEAZEN GROUP

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

The idea behind Visa Class A and SEAZEN GROUP LTD 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.