Correlation Between Visa and Bank Maspion

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

Diversification Opportunities for Visa and Bank Maspion

-0.81

Correlation Coefficient

Visa  Bank Maspion

Pay attention - limited upside

The 3 months correlation between Visa and Bank is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bank Maspion Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Maspion Indonesia 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 Maspion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Maspion Indonesia has no effect on the direction of Visa i.e., Visa and Bank Maspion go up and down completely randomly.

Pair Corralation between Visa and Bank Maspion

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.61 times more return on investment than Bank Maspion. However, Visa Class A is 1.63 times less risky than Bank Maspion. It trades about 0.23 of its potential returns per unit of risk. Bank Maspion Indonesia is currently generating about -0.3 per unit of risk. If you would invest  31,455  in Visa Class A on November 29, 2024 and sell it today you would earn a total of  4,128  from holding Visa Class A or generate 13.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Visa Class A  vs.  Bank Maspion Indonesia

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 Maspion Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Maspion Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Visa and Bank Maspion

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

The idea behind Visa Class A and Bank Maspion Indonesia 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.