Correlation Between Visa and Grasim Industries

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

Diversification Opportunities for Visa and Grasim Industries

0.0

Correlation Coefficient

Visa  Grasim Industries

Pay attention - limited upside

The 3 months correlation between Visa and Grasim is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Grasim Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grasim Industries 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 Grasim Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grasim Industries has no effect on the direction of Visa i.e., Visa and Grasim Industries go up and down completely randomly.

Pair Corralation between Visa and Grasim Industries

If you would invest  27,011  in Visa Class A on September 15, 2024 and sell it today you would earn a total of  4,463  from holding Visa Class A or generate 16.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

Visa Class A  vs.  Grasim Industries Limited

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.

Grasim Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grasim Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Grasim Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Grasim Industries

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

The idea behind Visa Class A and Grasim Industries Limited 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.