Correlation Between Visa and Konecranes Plc

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

Diversification Opportunities for Visa and Konecranes Plc

-0.18

Correlation Coefficient

Visa  Konecranes Plc

Good diversification

The 3 months correlation between Visa and Konecranes is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Konecranes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konecranes Plc 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 Konecranes Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konecranes Plc has no effect on the direction of Visa i.e., Visa and Konecranes Plc go up and down completely randomly.

Pair Corralation between Visa and Konecranes Plc

Taking into account the 90-day investment horizon Visa is expected to generate 1.25 times less return on investment than Konecranes Plc. But when comparing it to its historical volatility, Visa Class A is 1.31 times less risky than Konecranes Plc. It trades about 0.11 of its potential returns per unit of risk. Konecranes Plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,980  in Konecranes Plc on September 14, 2024 and sell it today you would earn a total of  620.00  from holding Konecranes Plc or generate 10.37% return on investment over 90 days.

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

Visa Class A  vs.  Konecranes Plc

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 weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Konecranes Plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Konecranes Plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Konecranes Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visa and Konecranes Plc

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

The idea behind Visa Class A and Konecranes Plc 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.