Correlation Between Visa and Bank Ina

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

Diversification Opportunities for Visa and Bank Ina

0.55

Correlation Coefficient

Visa  Bank Ina

Very weak diversification

The 3 months correlation between Visa and Bank is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bank Ina Perdana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Ina Perdana 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 Bank Ina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Ina Perdana has no effect on the direction of Visa i.e., Visa and Bank Ina go up and down completely randomly.

Pair Corralation between Visa and Bank Ina

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.6 times more return on investment than Bank Ina. However, Visa is 1.6 times more volatile than Bank Ina Perdana. It trades about 0.35 of its potential returns per unit of risk. Bank Ina Perdana is currently generating about 0.07 per unit of risk. If you would invest  33,392  in Visa Class A on November 29, 2024 and sell it today you would earn a total of  2,191  from holding Visa Class A or generate 6.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.91%
Values	Daily Returns

Visa Class A  vs.  Bank Ina Perdana

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 18 (%) 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.

Bank Ina Perdana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Ina Perdana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bank Ina is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Visa and Bank Ina

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

The idea behind Visa Class A and Bank Ina Perdana 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.