Correlation Between Visa and Citra Borneo

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

Diversification Opportunities for Visa and Citra Borneo

-0.81

Correlation Coefficient

Visa  Citra Borneo

Pay attention - limited upside

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

Pair Corralation between Visa and Citra Borneo

Taking into account the 90-day investment horizon Visa is expected to generate 6.55 times less return on investment than Citra Borneo. But when comparing it to its historical volatility, Visa Class A is 3.18 times less risky than Citra Borneo. It trades about 0.14 of its potential returns per unit of risk. Citra Borneo Utama is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  95,000  in Citra Borneo Utama on October 25, 2024 and sell it today you would earn a total of  14,500  from holding Citra Borneo Utama or generate 15.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Visa Class A  vs.  Citra Borneo Utama

Visa Class A

Risk-Adjusted Performance

18 of 100

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.

Citra Borneo Utama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citra Borneo Utama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Citra Borneo 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 Citra Borneo

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

The idea behind Visa Class A and Citra Borneo Utama 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.