Correlation Between Visa and Daesung Industrial

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

Diversification Opportunities for Visa and Daesung Industrial

-0.08

Correlation Coefficient

Visa  Daesung Industrial

Good diversification

The 3 months correlation between Visa and Daesung is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Daesung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Industrial 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 Daesung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Industrial has no effect on the direction of Visa i.e., Visa and Daesung Industrial go up and down completely randomly.

Pair Corralation between Visa and Daesung Industrial

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.55 times more return on investment than Daesung Industrial. However, Visa Class A is 1.83 times less risky than Daesung Industrial. It trades about 0.12 of its potential returns per unit of risk. Daesung Industrial Co is currently generating about 0.02 per unit of risk. If you would invest  31,669  in Visa Class A on December 21, 2024 and sell it today you would earn a total of  2,281  from holding Visa Class A or generate 7.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.92%
Values	Daily Returns

Visa Class A  vs.  Daesung Industrial Co

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 9 (%) 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.

Daesung Industrial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daesung Industrial Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daesung Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Daesung Industrial

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

The idea behind Visa Class A and Daesung Industrial Co 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.