Correlation Between Visa and Putra Rajawali

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

Diversification Opportunities for Visa and Putra Rajawali

-0.87

Correlation Coefficient

Visa  Putra Rajawali

Pay attention - limited upside

The 3 months correlation between Visa and Putra is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Putra Rajawali Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putra Rajawali Kencana 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 Putra Rajawali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putra Rajawali Kencana has no effect on the direction of Visa i.e., Visa and Putra Rajawali go up and down completely randomly.

Pair Corralation between Visa and Putra Rajawali

Taking into account the 90-day investment horizon Visa is expected to generate 2.29 times less return on investment than Putra Rajawali. But when comparing it to its historical volatility, Visa Class A is 8.32 times less risky than Putra Rajawali. It trades about 0.11 of its potential returns per unit of risk. Putra Rajawali Kencana is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Putra Rajawali Kencana on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Putra Rajawali Kencana or generate 0.0% return on investment over 90 days.

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

Visa Class A  vs.  Putra Rajawali Kencana

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

Putra Rajawali Kencana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putra Rajawali Kencana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Visa and Putra Rajawali

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

The idea behind Visa Class A and Putra Rajawali Kencana 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.