Correlation Between Visa and Limin Chemical

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

Diversification Opportunities for Visa and Limin Chemical

0.4

Correlation Coefficient

Visa  Limin Chemical

Very weak diversification

The 3 months correlation between Visa and Limin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Limin Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limin Chemical 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 Limin Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limin Chemical has no effect on the direction of Visa i.e., Visa and Limin Chemical go up and down completely randomly.

Pair Corralation between Visa and Limin Chemical

Taking into account the 90-day investment horizon Visa is expected to generate 3.11 times less return on investment than Limin Chemical. But when comparing it to its historical volatility, Visa Class A is 2.32 times less risky than Limin Chemical. It trades about 0.11 of its potential returns per unit of risk. Limin Chemical Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  823.00  in Limin Chemical Co on December 20, 2024 and sell it today you would earn a total of  180.00  from holding Limin Chemical Co or generate 21.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

Visa Class A  vs.  Limin Chemical Co

Visa Class A

Risk-Adjusted Performance

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

Limin Chemical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Limin Chemical Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Limin Chemical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Limin Chemical

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

The idea behind Visa Class A and Limin Chemical Co 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.