Correlation Between Visa and Ten Ren

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

Diversification Opportunities for Visa and Ten Ren

-0.78

Correlation Coefficient

Visa  Ten Ren

Pay attention - limited upside

The 3 months correlation between Visa and Ten is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ten Ren Tea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ten Ren Tea 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 Ten Ren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ten Ren Tea has no effect on the direction of Visa i.e., Visa and Ten Ren go up and down completely randomly.

Pair Corralation between Visa and Ten Ren

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.96 times more return on investment than Ten Ren. However, Visa Class A is 1.04 times less risky than Ten Ren. It trades about 0.01 of its potential returns per unit of risk. Ten Ren Tea is currently generating about -0.21 per unit of risk. If you would invest  31,238  in Visa Class A on October 11, 2024 and sell it today you would earn a total of  22.00  from holding Visa Class A or generate 0.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Visa Class A  vs.  Ten Ren Tea

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.

Ten Ren Tea

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ten Ren Tea has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Visa and Ten Ren

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

The idea behind Visa Class A and Ten Ren Tea 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.