Correlation Between Visa and Episil Holding

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

Diversification Opportunities for Visa and Episil Holding

-0.75

Correlation Coefficient

Visa  Episil Holding

Pay attention - limited upside

The 3 months correlation between Visa and Episil is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Episil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Episil Holding 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 Episil Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Episil Holding has no effect on the direction of Visa i.e., Visa and Episil Holding go up and down completely randomly.

Pair Corralation between Visa and Episil Holding

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.42 times more return on investment than Episil Holding. However, Visa Class A is 2.37 times less risky than Episil Holding. It trades about 0.11 of its potential returns per unit of risk. Episil Holding is currently generating about -0.09 per unit of risk. If you would invest  26,470  in Visa Class A on October 10, 2024 and sell it today you would earn a total of  4,697  from holding Visa Class A or generate 17.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Visa Class A  vs.  Episil Holding

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.

Episil Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Episil Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Visa and Episil Holding

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

The idea behind Visa Class A and Episil Holding 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.