Correlation Between Visa and Compa Sibiu

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

Diversification Opportunities for Visa and Compa Sibiu

-0.83

Correlation Coefficient

Visa  Compa Sibiu

Pay attention - limited upside

The 3 months correlation between Visa and Compa is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Compa Sibiu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compa Sibiu 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 Compa Sibiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compa Sibiu has no effect on the direction of Visa i.e., Visa and Compa Sibiu go up and down completely randomly.

Pair Corralation between Visa and Compa Sibiu

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.75 times more return on investment than Compa Sibiu. However, Visa Class A is 1.33 times less risky than Compa Sibiu. It trades about 0.34 of its potential returns per unit of risk. Compa Sibiu is currently generating about -0.15 per unit of risk. If you would invest  29,129  in Visa Class A on September 4, 2024 and sell it today you would earn a total of  2,536  from holding Visa Class A or generate 8.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Visa Class A  vs.  Compa Sibiu

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.

Compa Sibiu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compa Sibiu has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Visa and Compa Sibiu

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

The idea behind Visa Class A and Compa Sibiu 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.