Correlation Between Solowin Holdings and Visa

Can any of the company-specific risk be diversified away by investing in both Solowin Holdings and Visa 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 Solowin Holdings and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solowin Holdings Ordinary and Visa Class A, you can compare the effects of market volatilities on Solowin Holdings and Visa 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 Solowin Holdings with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solowin Holdings and Visa.

Diversification Opportunities for Solowin Holdings and Visa

-0.78

Correlation Coefficient

Solowin Holdings  Visa

Pay attention - limited upside

The 3 months correlation between Solowin and Visa is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Solowin Holdings Ordinary and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and Solowin Holdings 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 Solowin Holdings Ordinary are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Solowin Holdings i.e., Solowin Holdings and Visa go up and down completely randomly.

Pair Corralation between Solowin Holdings and Visa

Given the investment horizon of 90 days Solowin Holdings Ordinary is expected to under-perform the Visa. In addition to that, Solowin Holdings is 8.28 times more volatile than Visa Class A. It trades about -0.13 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.41 per unit of volatility. If you would invest  31,387  in Visa Class A on December 2, 2024 and sell it today you would earn a total of  4,884  from holding Visa Class A or generate 15.56% return on investment over 90 days.

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

Solowin Holdings Ordinary  vs.  Visa Class A

Solowin Holdings Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solowin Holdings Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 19 (%) 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.

Pair Trading with Solowin Holdings and Visa

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

The idea behind Solowin Holdings Ordinary and Visa Class A 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.