Correlation Between Visa and Power Group

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

Diversification Opportunities for Visa and Power Group

0.0

Correlation Coefficient

Visa  Power Group

Pay attention - limited upside

The 3 months correlation between Visa and Power is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Power Group Projects in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Group Projects 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 Power Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Group Projects has no effect on the direction of Visa i.e., Visa and Power Group go up and down completely randomly.

Pair Corralation between Visa and Power Group

If you would invest  31,777  in Visa Class A on December 17, 2024 and sell it today you would earn a total of  1,403  from holding Visa Class A or generate 4.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Visa Class A  vs.  Power Group Projects

Visa Class A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 5 (%) 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.

Power Group Projects

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Group Projects has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Power Group is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Visa and Power Group

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

The idea behind Visa Class A and Power Group Projects 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.