Correlation Between Visa and Chitose Internasional

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

Diversification Opportunities for Visa and Chitose Internasional

-0.19

Correlation Coefficient

Visa  Chitose Internasional

Good diversification

The 3 months correlation between Visa and Chitose is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Chitose Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chitose Internasional Tbk 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 Chitose Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chitose Internasional Tbk has no effect on the direction of Visa i.e., Visa and Chitose Internasional go up and down completely randomly.

Pair Corralation between Visa and Chitose Internasional

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.29 times more return on investment than Chitose Internasional. However, Visa Class A is 3.4 times less risky than Chitose Internasional. It trades about -0.15 of its potential returns per unit of risk. Chitose Internasional Tbk is currently generating about -0.13 per unit of risk. If you would invest  31,589  in Visa Class A on October 15, 2024 and sell it today you would lose (897.00) from holding Visa Class A or give up 2.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Visa Class A  vs.  Chitose Internasional Tbk

Visa Class A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) 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.

Chitose Internasional Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Visa Class A and Chitose Internasional Tbk 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.