Correlation Between Visa and Arcure SA

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

Diversification Opportunities for Visa and Arcure SA

-0.03

Correlation Coefficient

Visa  Arcure SA

Good diversification

The 3 months correlation between Visa and Arcure is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Arcure SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcure SA 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 Arcure SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcure SA has no effect on the direction of Visa i.e., Visa and Arcure SA go up and down completely randomly.

Pair Corralation between Visa and Arcure SA

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.23 times more return on investment than Arcure SA. However, Visa Class A is 4.42 times less risky than Arcure SA. It trades about 0.28 of its potential returns per unit of risk. Arcure SA is currently generating about -0.03 per unit of risk. If you would invest  30,687  in Visa Class A on November 20, 2024 and sell it today you would earn a total of  4,694  from holding Visa Class A or generate 15.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Visa Class A  vs.  Arcure SA

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 21 (%) 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.

Arcure SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arcure SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Visa and Arcure SA

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

The idea behind Visa Class A and Arcure SA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.