Correlation Between Visa and Malin Plc

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

Diversification Opportunities for Visa and Malin Plc

0.67

Correlation Coefficient

Visa  Malin Plc

Poor diversification

The 3 months correlation between Visa and Malin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Malin plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malin 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 Malin Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malin plc has no effect on the direction of Visa i.e., Visa and Malin Plc go up and down completely randomly.

Pair Corralation between Visa and Malin Plc

Taking into account the 90-day investment horizon Visa is expected to generate 3.77 times less return on investment than Malin Plc. But when comparing it to its historical volatility, Visa Class A is 3.8 times less risky than Malin Plc. It trades about 0.12 of its potential returns per unit of risk. Malin plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  625.00  in Malin plc on September 23, 2024 and sell it today you would earn a total of  245.00  from holding Malin plc or generate 39.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

Visa Class A  vs.  Malin plc

Visa Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) 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.

Malin plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Malin plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Malin Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Malin Plc

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

The idea behind Visa Class A and Malin 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.