Correlation Between Visa and Intermedia Capital

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

Diversification Opportunities for Visa and Intermedia Capital

0.0

Correlation Coefficient

Visa  Intermedia Capital

Pay attention - limited upside

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

Pair Corralation between Visa and Intermedia Capital

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.39 times more return on investment than Intermedia Capital. However, Visa Class A is 2.53 times less risky than Intermedia Capital. It trades about 0.09 of its potential returns per unit of risk. Intermedia Capital Tbk is currently generating about -0.12 per unit of risk. If you would invest  20,485  in Visa Class A on September 19, 2024 and sell it today you would earn a total of  10,493  from holding Visa Class A or generate 51.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Visa Class A  vs.  Intermedia Capital Tbk

Visa Class A

Risk-Adjusted Performance

8 of 100

Good

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.

Intermedia Capital Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermedia Capital Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Intermedia Capital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Visa and Intermedia Capital

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

The idea behind Visa Class A and Intermedia Capital Tbk 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.