Correlation Between Visa and Ningbo Jintian

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

Diversification Opportunities for Visa and Ningbo Jintian

0.64

Correlation Coefficient

Visa  Ningbo Jintian

Poor diversification

The 3 months correlation between Visa and Ningbo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ningbo Jintian Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Jintian Copper 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 Ningbo Jintian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Jintian Copper has no effect on the direction of Visa i.e., Visa and Ningbo Jintian go up and down completely randomly.

Pair Corralation between Visa and Ningbo Jintian

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.43 times more return on investment than Ningbo Jintian. However, Visa Class A is 2.32 times less risky than Ningbo Jintian. It trades about 0.07 of its potential returns per unit of risk. Ningbo Jintian Copper is currently generating about -0.01 per unit of risk. If you would invest  26,322  in Visa Class A on October 9, 2024 and sell it today you would earn a total of  4,845  from holding Visa Class A or generate 18.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.95%
Values	Daily Returns

Visa Class A  vs.  Ningbo Jintian Copper

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 showed solid returns over the last few months and may actually be approaching a breakup point.

Ningbo Jintian Copper

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Jintian Copper are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ningbo Jintian is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Ningbo Jintian

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

The idea behind Visa Class A and Ningbo Jintian Copper 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.