Correlation Between Visa and Qingdao Gon

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

Diversification Opportunities for Visa and Qingdao Gon

0.55

Correlation Coefficient

Visa  Qingdao Gon

Very weak diversification

The 3 months correlation between Visa and Qingdao is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Qingdao Gon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Gon Technology 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 Qingdao Gon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Gon Technology has no effect on the direction of Visa i.e., Visa and Qingdao Gon go up and down completely randomly.

Pair Corralation between Visa and Qingdao Gon

Taking into account the 90-day investment horizon Visa is expected to generate 1.34 times less return on investment than Qingdao Gon. But when comparing it to its historical volatility, Visa Class A is 1.94 times less risky than Qingdao Gon. It trades about 0.07 of its potential returns per unit of risk. Qingdao Gon Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,935  in Qingdao Gon Technology on October 22, 2024 and sell it today you would earn a total of  433.00  from holding Qingdao Gon Technology or generate 22.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.56%
Values	Daily Returns

Visa Class A  vs.  Qingdao Gon Technology

Visa Class A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 14 (%) 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 February 2025.

Qingdao Gon Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Gon Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qingdao Gon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Visa and Qingdao Gon

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

The idea behind Visa Class A and Qingdao Gon Technology 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.