Correlation Between Visa and China Sanjiang
Can any of the company-specific risk be diversified away by investing in both Visa and China Sanjiang 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 China Sanjiang 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 China Sanjiang Fine, you can compare the effects of market volatilities on Visa and China Sanjiang 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 China Sanjiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and China Sanjiang.
Diversification Opportunities for Visa and China Sanjiang
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and China is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and China Sanjiang Fine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Sanjiang Fine 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 China Sanjiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Sanjiang Fine has no effect on the direction of Visa i.e., Visa and China Sanjiang go up and down completely randomly.
Pair Corralation between Visa and China Sanjiang
Taking into account the 90-day investment horizon Visa is expected to generate 1.4 times less return on investment than China Sanjiang. But when comparing it to its historical volatility, Visa Class A is 3.58 times less risky than China Sanjiang. It trades about 0.09 of its potential returns per unit of risk. China Sanjiang Fine is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 16.00 in China Sanjiang Fine on October 24, 2024 and sell it today you would earn a total of 5.00 from holding China Sanjiang Fine or generate 31.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.33% |
Values | Daily Returns |
Visa Class A vs. China Sanjiang Fine
Performance |
Timeline |
Visa Class A |
China Sanjiang Fine |
Visa and China Sanjiang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and China Sanjiang
The main advantage of trading using opposite Visa and China Sanjiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, China Sanjiang 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 China Sanjiang will offset losses from the drop in China Sanjiang's long position.Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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