Correlation Between Visa and Biohit Oyj

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

Diversification Opportunities for Visa and Biohit Oyj

0.09

Correlation Coefficient

Visa  Biohit Oyj

Significant diversification

The 3 months correlation between Visa and Biohit is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Biohit Oyj B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biohit Oyj B 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 Biohit Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biohit Oyj B has no effect on the direction of Visa i.e., Visa and Biohit Oyj go up and down completely randomly.

Pair Corralation between Visa and Biohit Oyj

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.49 times more return on investment than Biohit Oyj. However, Visa Class A is 2.04 times less risky than Biohit Oyj. It trades about 0.22 of its potential returns per unit of risk. Biohit Oyj B is currently generating about 0.03 per unit of risk. If you would invest  27,442  in Visa Class A on September 28, 2024 and sell it today you would earn a total of  4,465  from holding Visa Class A or generate 16.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Visa Class A  vs.  Biohit Oyj B

Visa Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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.

Biohit Oyj B

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biohit Oyj B are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Biohit Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Visa and Biohit Oyj

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

The idea behind Visa Class A and Biohit Oyj B 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.