Correlation Between Visa and Hensel Davest

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

Diversification Opportunities for Visa and Hensel Davest

-0.43

Correlation Coefficient

Visa  Hensel Davest

Very good diversification

The 3 months correlation between Visa and Hensel is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Hensel Davest Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hensel Davest Indonesia 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 Hensel Davest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hensel Davest Indonesia has no effect on the direction of Visa i.e., Visa and Hensel Davest go up and down completely randomly.

Pair Corralation between Visa and Hensel Davest

Taking into account the 90-day investment horizon Visa is expected to generate 2.28 times less return on investment than Hensel Davest. But when comparing it to its historical volatility, Visa Class A is 5.7 times less risky than Hensel Davest. It trades about 0.15 of its potential returns per unit of risk. Hensel Davest Indonesia is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,800  in Hensel Davest Indonesia on December 27, 2024 and sell it today you would earn a total of  200.00  from holding Hensel Davest Indonesia or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  Hensel Davest Indonesia

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 11 (%) 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.

Hensel Davest Indonesia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hensel Davest Indonesia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Hensel Davest disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Hensel Davest

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

The idea behind Visa Class A and Hensel Davest Indonesia 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.