Correlation Between Visa and Samfine Creation

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

Diversification Opportunities for Visa and Samfine Creation

0.68

Correlation Coefficient

Visa  Samfine Creation

Poor diversification

The 3 months correlation between Visa and Samfine is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Samfine Creation Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samfine Creation Holdings 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 Samfine Creation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samfine Creation Holdings has no effect on the direction of Visa i.e., Visa and Samfine Creation go up and down completely randomly.

Pair Corralation between Visa and Samfine Creation

Taking into account the 90-day investment horizon Visa is expected to generate 1.78 times less return on investment than Samfine Creation. But when comparing it to its historical volatility, Visa Class A is 15.21 times less risky than Samfine Creation. It trades about 0.1 of its potential returns per unit of risk. Samfine Creation Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Samfine Creation Holdings on September 17, 2024 and sell it today you would lose (413.00) from holding Samfine Creation Holdings or give up 77.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	68.75%
Values	Daily Returns

Visa Class A  vs.  Samfine Creation Holdings

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.

Samfine Creation Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samfine Creation Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady technical indicators, Samfine Creation reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Samfine Creation

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

The idea behind Visa Class A and Samfine Creation Holdings 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.