Correlation Between Visa and Beijing Cisri

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

Diversification Opportunities for Visa and Beijing Cisri

0.32

Correlation Coefficient

Visa  Beijing Cisri

Weak diversification

The 3 months correlation between Visa and Beijing is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Beijing Cisri Gaona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Cisri Gaona 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 Beijing Cisri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Cisri Gaona has no effect on the direction of Visa i.e., Visa and Beijing Cisri go up and down completely randomly.

Pair Corralation between Visa and Beijing Cisri

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.39 times more return on investment than Beijing Cisri. However, Visa Class A is 2.54 times less risky than Beijing Cisri. It trades about 0.12 of its potential returns per unit of risk. Beijing Cisri Gaona is currently generating about 0.03 per unit of risk. If you would invest  26,555  in Visa Class A on September 25, 2024 and sell it today you would earn a total of  5,167  from holding Visa Class A or generate 19.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.8%
Values	Daily Returns

Visa Class A  vs.  Beijing Cisri Gaona

Visa Class A

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Beijing Cisri Gaona

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Cisri Gaona are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Cisri sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Beijing Cisri

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

The idea behind Visa Class A and Beijing Cisri Gaona 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.