Correlation Between Visa and Makmur Berkah

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

Diversification Opportunities for Visa and Makmur Berkah

-0.6

Correlation Coefficient

Visa  Makmur Berkah

Excellent diversification

The 3 months correlation between Visa and Makmur is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Makmur Berkah Amanda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makmur Berkah Amanda 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 Makmur Berkah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makmur Berkah Amanda has no effect on the direction of Visa i.e., Visa and Makmur Berkah go up and down completely randomly.

Pair Corralation between Visa and Makmur Berkah

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.04 times more return on investment than Makmur Berkah. However, Visa is 1.04 times more volatile than Makmur Berkah Amanda. It trades about 0.13 of its potential returns per unit of risk. Makmur Berkah Amanda is currently generating about -0.16 per unit of risk. If you would invest  30,926  in Visa Class A on December 18, 2024 and sell it today you would earn a total of  2,529  from holding Visa Class A or generate 8.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.61%
Values	Daily Returns

Visa Class A  vs.  Makmur Berkah Amanda

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 10 (%) 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.

Makmur Berkah Amanda

Risk-Adjusted Performance

Very Weak

Over the last 90 days Makmur Berkah Amanda has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Visa and Makmur Berkah

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

The idea behind Visa Class A and Makmur Berkah Amanda 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.