Correlation Between Visa and China Electric
Can any of the company-specific risk be diversified away by investing in both Visa and China Electric 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 China Electric 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 China Electric Manufacturing, you can compare the effects of market volatilities on Visa and China Electric 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 China Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and China Electric.
Diversification Opportunities for Visa and China Electric
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and China is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and China Electric Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Electric Manuf 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 China Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Electric Manuf has no effect on the direction of Visa i.e., Visa and China Electric go up and down completely randomly.
Pair Corralation between Visa and China Electric
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.94 times more return on investment than China Electric. However, Visa Class A is 1.06 times less risky than China Electric. It trades about 0.11 of its potential returns per unit of risk. China Electric Manufacturing is currently generating about 0.04 per unit of risk. If you would invest 32,037 in Visa Class A on December 26, 2024 and sell it today you would earn a total of 2,381 from holding Visa Class A or generate 7.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 90.16% |
Values | Daily Returns |
Visa Class A vs. China Electric Manufacturing
Performance |
Timeline |
Visa Class A |
China Electric Manuf |
Visa and China Electric Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and China Electric
The main advantage of trading using opposite Visa and China Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, China Electric 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 China Electric will offset losses from the drop in China Electric's long position.Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
China Electric vs. Hold Key Electric Wire | China Electric vs. Anderson Industrial Corp | China Electric vs. Carnival Industrial Corp | China Electric vs. Lee Chi Enterprises |
Check out your portfolio center.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume |