Correlation Between Visa and Danh Khoi

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

Diversification Opportunities for Visa and Danh Khoi

0.85

Correlation Coefficient

Visa  Danh Khoi

Very poor diversification

The 3 months correlation between Visa and Danh is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Danh Khoi Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danh Khoi Group 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 Danh Khoi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danh Khoi Group has no effect on the direction of Visa i.e., Visa and Danh Khoi go up and down completely randomly.

Pair Corralation between Visa and Danh Khoi

Taking into account the 90-day investment horizon Visa is expected to generate 17.66 times less return on investment than Danh Khoi. But when comparing it to its historical volatility, Visa Class A is 3.68 times less risky than Danh Khoi. It trades about 0.06 of its potential returns per unit of risk. Danh Khoi Group is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  400,000  in Danh Khoi Group on September 30, 2024 and sell it today you would earn a total of  90,000  from holding Danh Khoi Group or generate 22.5% return on investment over 90 days.

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

Visa Class A  vs.  Danh Khoi Group

Visa Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Danh Khoi Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Danh Khoi Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Danh Khoi displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Danh Khoi

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

The idea behind Visa Class A and Danh Khoi Group 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.