Correlation Between Visa and Neo Neon

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

Diversification Opportunities for Visa and Neo Neon

0.23

Correlation Coefficient

Visa  Neo Neon

Modest diversification

The 3 months correlation between Visa and Neo is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Neo Neon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Neon Holdings 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 Neo Neon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Neon Holdings has no effect on the direction of Visa i.e., Visa and Neo Neon go up and down completely randomly.

Pair Corralation between Visa and Neo Neon

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.1 times more return on investment than Neo Neon. However, Visa is 1.1 times more volatile than Neo Neon Holdings Limited. It trades about 0.11 of its potential returns per unit of risk. Neo Neon Holdings Limited is currently generating about 0.05 per unit of risk. If you would invest  32,011  in Visa Class A on December 24, 2024 and sell it today you would earn a total of  2,376  from holding Visa Class A or generate 7.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.8%
Values	Daily Returns

Visa Class A  vs.  Neo Neon Holdings Limited

Visa Class A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) 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 April 2025.

Neo Neon Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Neo Neon Holdings Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Neo Neon is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Neo Neon

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

The idea behind Visa Class A and Neo Neon Holdings Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.