Correlation Between Visa and Guotai Epoint

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

Diversification Opportunities for Visa and Guotai Epoint

-0.49

Correlation Coefficient

Visa  Guotai Epoint

Very good diversification

The 3 months correlation between Visa and Guotai is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Guotai Epoint Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guotai Epoint Software 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 Guotai Epoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guotai Epoint Software has no effect on the direction of Visa i.e., Visa and Guotai Epoint go up and down completely randomly.

Pair Corralation between Visa and Guotai Epoint

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.5 times more return on investment than Guotai Epoint. However, Visa Class A is 2.02 times less risky than Guotai Epoint. It trades about 0.12 of its potential returns per unit of risk. Guotai Epoint Software is currently generating about -0.48 per unit of risk. If you would invest  30,830  in Visa Class A on October 8, 2024 and sell it today you would earn a total of  661.00  from holding Visa Class A or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Guotai Epoint Software

Visa Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 16 (%) 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.

Guotai Epoint Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guotai Epoint Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Visa and Guotai Epoint

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

The idea behind Visa Class A and Guotai Epoint Software 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.