Correlation Between Visa and Energem Corp

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

Diversification Opportunities for Visa and Energem Corp

0.4

Correlation Coefficient

Visa  Energem Corp

Very weak diversification

The 3 months correlation between Visa and Energem is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Energem Corp Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energem Corp Warrant 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 Energem Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energem Corp Warrant has no effect on the direction of Visa i.e., Visa and Energem Corp go up and down completely randomly.

Pair Corralation between Visa and Energem Corp

If you would invest  25,380  in Visa Class A on October 3, 2024 and sell it today you would earn a total of  6,224  from holding Visa Class A or generate 24.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.37%
Values	Daily Returns

Visa Class A  vs.  Energem Corp Warrant

Visa Class A

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 15 (%) 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.

Energem Corp Warrant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energem Corp Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Energem Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Visa and Energem Corp

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

The idea behind Visa Class A and Energem Corp Warrant 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.