Correlation Between Visa and CCC Intelligent

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

Diversification Opportunities for Visa and CCC Intelligent

-0.55

Correlation Coefficient

Visa  CCC Intelligent

Excellent diversification

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

Pair Corralation between Visa and CCC Intelligent

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.77 times more return on investment than CCC Intelligent. However, Visa Class A is 1.29 times less risky than CCC Intelligent. It trades about 0.08 of its potential returns per unit of risk. CCC Intelligent Solutions is currently generating about -0.31 per unit of risk. If you would invest  32,037  in Visa Class A on December 25, 2024 and sell it today you would earn a total of  1,529  from holding Visa Class A or generate 4.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  CCC Intelligent Solutions

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CCC Intelligent Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days CCC Intelligent Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Visa and CCC Intelligent

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

The idea behind Visa Class A and CCC Intelligent Solutions 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.