Correlation Between Visa and QL Resources

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

Diversification Opportunities for Visa and QL Resources

0.68

Correlation Coefficient

Visa  QL Resources

Poor diversification

The 3 months correlation between Visa and 7084 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and QL Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QL Resources Bhd 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 QL Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QL Resources Bhd has no effect on the direction of Visa i.e., Visa and QL Resources go up and down completely randomly.

Pair Corralation between Visa and QL Resources

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.09 times more return on investment than QL Resources. However, Visa is 1.09 times more volatile than QL Resources Bhd. It trades about 0.12 of its potential returns per unit of risk. QL Resources Bhd is currently generating about -0.06 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 Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Visa Class A  vs.  QL Resources Bhd

Visa Class A

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 20 (%) 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.

QL Resources Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in QL Resources Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, QL Resources is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Visa and QL Resources

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

The idea behind Visa Class A and QL Resources Bhd 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..