Correlation Between Visa and Alumexx NV

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

Diversification Opportunities for Visa and Alumexx NV

0.05

Correlation Coefficient

Visa  Alumexx NV

Significant diversification

The 3 months correlation between Visa and Alumexx is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Alumexx NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumexx NV 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 Alumexx NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumexx NV has no effect on the direction of Visa i.e., Visa and Alumexx NV go up and down completely randomly.

Pair Corralation between Visa and Alumexx NV

Taking into account the 90-day investment horizon Visa is expected to generate 1.3 times less return on investment than Alumexx NV. But when comparing it to its historical volatility, Visa Class A is 3.99 times less risky than Alumexx NV. It trades about 0.08 of its potential returns per unit of risk. Alumexx NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  127.00  in Alumexx NV on September 17, 2024 and sell it today you would earn a total of  1.00  from holding Alumexx NV or generate 0.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Alumexx NV

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

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 inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alumexx NV

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alumexx NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alumexx NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visa and Alumexx NV

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

The idea behind Visa Class A and Alumexx NV 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.