Correlation Between Visa and Global Ferronickel

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

Diversification Opportunities for Visa and Global Ferronickel

-0.8

Correlation Coefficient

Visa  Global Ferronickel

Pay attention - limited upside

The 3 months correlation between Visa and Global is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Global Ferronickel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ferronickel 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 Global Ferronickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ferronickel has no effect on the direction of Visa i.e., Visa and Global Ferronickel go up and down completely randomly.

Pair Corralation between Visa and Global Ferronickel

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.47 times more return on investment than Global Ferronickel. However, Visa Class A is 2.13 times less risky than Global Ferronickel. It trades about 0.09 of its potential returns per unit of risk. Global Ferronickel Holdings is currently generating about -0.07 per unit of risk. If you would invest  20,419  in Visa Class A on September 24, 2024 and sell it today you would earn a total of  11,352  from holding Visa Class A or generate 55.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.59%
Values	Daily Returns

Visa Class A  vs.  Global Ferronickel Holdings

Visa Class A

Risk-Adjusted Performance

17 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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.

Global Ferronickel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ferronickel Holdings 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Visa and Global Ferronickel

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

The idea behind Visa Class A and Global Ferronickel Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.