Correlation Between Visa and Suzhou TFC

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

Diversification Opportunities for Visa and Suzhou TFC

0.28

Correlation Coefficient

Visa  Suzhou TFC

Modest diversification

The 3 months correlation between Visa and Suzhou is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Suzhou TFC Optical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou TFC Optical 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 Suzhou TFC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou TFC Optical has no effect on the direction of Visa i.e., Visa and Suzhou TFC go up and down completely randomly.

Pair Corralation between Visa and Suzhou TFC

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.25 times more return on investment than Suzhou TFC. However, Visa Class A is 4.08 times less risky than Suzhou TFC. It trades about 0.08 of its potential returns per unit of risk. Suzhou TFC Optical is currently generating about -0.22 per unit of risk. If you would invest  31,185  in Visa Class A on September 20, 2024 and sell it today you would earn a total of  394.00  from holding Visa Class A or generate 1.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Visa Class A  vs.  Suzhou TFC Optical

Visa Class A

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Suzhou TFC Optical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Suzhou TFC Optical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suzhou TFC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Suzhou TFC

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

The idea behind Visa Class A and Suzhou TFC Optical 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.