Correlation Between Visa and Galectin Therapeutics

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

Diversification Opportunities for Visa and Galectin Therapeutics

0.37

Correlation Coefficient

Visa  Galectin Therapeutics

Weak diversification

The 3 months correlation between Visa and Galectin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Galectin Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galectin Therapeutics 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 Galectin Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galectin Therapeutics has no effect on the direction of Visa i.e., Visa and Galectin Therapeutics go up and down completely randomly.

Pair Corralation between Visa and Galectin Therapeutics

Taking into account the 90-day investment horizon Visa is expected to generate 4.39 times less return on investment than Galectin Therapeutics. But when comparing it to its historical volatility, Visa Class A is 3.96 times less risky than Galectin Therapeutics. It trades about 0.17 of its potential returns per unit of risk. Galectin Therapeutics is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Galectin Therapeutics on December 28, 2024 and sell it today you would earn a total of  58.00  from holding Galectin Therapeutics or generate 52.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Galectin Therapeutics

Visa Class A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) 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 April 2025.

Galectin Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Galectin Therapeutics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting essential indicators, Galectin Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Galectin Therapeutics

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

The idea behind Visa Class A and Galectin Therapeutics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.