Correlation Between Visa and Radiant Globaltech

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

Diversification Opportunities for Visa and Radiant Globaltech

-0.27

Correlation Coefficient

Visa  Radiant Globaltech

Very good diversification

The 3 months correlation between Visa and Radiant is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Radiant Globaltech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Globaltech 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 Radiant Globaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Globaltech Bhd has no effect on the direction of Visa i.e., Visa and Radiant Globaltech go up and down completely randomly.

Pair Corralation between Visa and Radiant Globaltech

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.44 times more return on investment than Radiant Globaltech. However, Visa Class A is 2.28 times less risky than Radiant Globaltech. It trades about 0.16 of its potential returns per unit of risk. Radiant Globaltech Bhd is currently generating about -0.05 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	Insignificant
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  Radiant Globaltech 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.

Radiant Globaltech Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Radiant Globaltech Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Visa and Radiant Globaltech

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

The idea behind Visa Class A and Radiant Globaltech 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.