Correlation Between Visa and Cadeler AS

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

Diversification Opportunities for Visa and Cadeler AS

-0.83

Correlation Coefficient

Visa  Cadeler AS

Pay attention - limited upside

The 3 months correlation between Visa and Cadeler is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cadeler AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadeler AS 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 Cadeler AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadeler AS has no effect on the direction of Visa i.e., Visa and Cadeler AS go up and down completely randomly.

Pair Corralation between Visa and Cadeler AS

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.52 times more return on investment than Cadeler AS. However, Visa Class A is 1.92 times less risky than Cadeler AS. It trades about 0.28 of its potential returns per unit of risk. Cadeler AS is currently generating about -0.15 per unit of risk. If you would invest  29,129  in Visa Class A on September 5, 2024 and sell it today you would earn a total of  2,172  from holding Visa Class A or generate 7.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Cadeler AS

Visa Class A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cadeler AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadeler AS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Cadeler AS is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Visa and Cadeler AS

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

The idea behind Visa Class A and Cadeler AS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.