Correlation Between Visa and Pergamon Status

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

Diversification Opportunities for Visa and Pergamon Status

-0.85

Correlation Coefficient

Visa  Pergamon Status

Pay attention - limited upside

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

Pair Corralation between Visa and Pergamon Status

Taking into account the 90-day investment horizon Visa is expected to generate 5.26 times less return on investment than Pergamon Status. But when comparing it to its historical volatility, Visa Class A is 3.58 times less risky than Pergamon Status. It trades about 0.08 of its potential returns per unit of risk. Pergamon Status Dis is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,855  in Pergamon Status Dis on September 24, 2024 and sell it today you would earn a total of  590.00  from holding Pergamon Status Dis or generate 7.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Visa Class A  vs.  Pergamon Status Dis

Visa Class A

Risk-Adjusted Performance

17 of 100

OK

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.

Pergamon Status Dis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pergamon Status Dis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Visa and Pergamon Status

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

The idea behind Visa Class A and Pergamon Status Dis 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.