Correlation Between Visa and Concraft Holding

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

Diversification Opportunities for Visa and Concraft Holding

-0.8

Correlation Coefficient

Visa  Concraft Holding

Pay attention - limited upside

The 3 months correlation between Visa and Concraft is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Concraft Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concraft 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 Concraft Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concraft Holding has no effect on the direction of Visa i.e., Visa and Concraft Holding go up and down completely randomly.

Pair Corralation between Visa and Concraft Holding

Taking into account the 90-day investment horizon Visa is expected to generate 1.3 times less return on investment than Concraft Holding. But when comparing it to its historical volatility, Visa Class A is 4.6 times less risky than Concraft Holding. It trades about 0.07 of its potential returns per unit of risk. Concraft Holding Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,380  in Concraft Holding Co on October 11, 2024 and sell it today you would earn a total of  95.00  from holding Concraft Holding Co or generate 6.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.18%
Values	Daily Returns

Visa Class A  vs.  Concraft Holding Co

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.

Concraft Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concraft Holding Co 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 Concraft Holding

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

The idea behind Visa Class A and Concraft Holding 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.