Correlation Between Visa and Bursa Cimento

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

Diversification Opportunities for Visa and Bursa Cimento

0.81

Correlation Coefficient

Visa  Bursa Cimento

Very poor diversification

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

Pair Corralation between Visa and Bursa Cimento

Taking into account the 90-day investment horizon Visa is expected to generate 32.1 times less return on investment than Bursa Cimento. But when comparing it to its historical volatility, Visa Class A is 3.21 times less risky than Bursa Cimento. It trades about 0.03 of its potential returns per unit of risk. Bursa Cimento Fabrikasi is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  673.00  in Bursa Cimento Fabrikasi on October 12, 2024 and sell it today you would earn a total of  221.00  from holding Bursa Cimento Fabrikasi or generate 32.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	93.18%
Values	Daily Returns

Visa Class A  vs.  Bursa Cimento Fabrikasi

Visa Class A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) 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 February 2025.

Bursa Cimento Fabrikasi

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bursa Cimento Fabrikasi are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Bursa Cimento demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Bursa Cimento

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

The idea behind Visa Class A and Bursa Cimento Fabrikasi 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.