Correlation Between Visa and Frontken Bhd

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

Diversification Opportunities for Visa and Frontken Bhd

-0.69

Correlation Coefficient

Visa  Frontken Bhd

Excellent diversification

The 3 months correlation between Visa and Frontken is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Frontken Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontken 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 Frontken Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontken Bhd has no effect on the direction of Visa i.e., Visa and Frontken Bhd go up and down completely randomly.

Pair Corralation between Visa and Frontken Bhd

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.42 times more return on investment than Frontken Bhd. However, Visa Class A is 2.38 times less risky than Frontken Bhd. It trades about 0.16 of its potential returns per unit of risk. Frontken Bhd is currently generating about -0.1 per unit of risk. 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	Weak
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  Frontken Bhd

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 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.

Frontken Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frontken Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Visa and Frontken Bhd

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

The idea behind Visa Class A and Frontken 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.