Correlation Between Visa and Digistar Bhd

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

Diversification Opportunities for Visa and Digistar Bhd

-0.1

Correlation Coefficient

Visa  Digistar Bhd

Good diversification

The 3 months correlation between Visa and Digistar is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Digistar Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digistar Bhd 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 Digistar Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digistar Bhd has no effect on the direction of Visa i.e., Visa and Digistar Bhd go up and down completely randomly.

Pair Corralation between Visa and Digistar Bhd

If you would invest  31,478  in Visa Class A on December 29, 2024 and sell it today you would earn a total of  3,508  from holding Visa Class A or generate 11.14% return on investment over 90 days.

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

Visa Class A  vs.  Digistar Bhd

Visa Class A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.

Digistar Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digistar Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Digistar Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Visa and Digistar Bhd

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

The idea behind Visa Class A and Digistar Bhd 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.