Correlation Between Visa and COSCO SHIPPING

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

Diversification Opportunities for Visa and COSCO SHIPPING

0.88

Correlation Coefficient

Visa  COSCO SHIPPING

Very poor diversification

The 3 months correlation between Visa and COSCO is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and COSCO SHIPPING International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Inter 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 COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Inter has no effect on the direction of Visa i.e., Visa and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Visa and COSCO SHIPPING

If you would invest  30,825  in Visa Class A on September 15, 2024 and sell it today you would earn a total of  649.00  from holding Visa Class A or generate 2.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

Visa Class A  vs.  COSCO SHIPPING International

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) 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.

COSCO SHIPPING Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COSCO SHIPPING International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, COSCO SHIPPING is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and COSCO SHIPPING

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

The idea behind Visa Class A and COSCO SHIPPING International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.