Correlation Between Visa and Hoang Huy

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

Diversification Opportunities for Visa and Hoang Huy

0.51

Correlation Coefficient

Visa  Hoang Huy

Very weak diversification

The 3 months correlation between Visa and Hoang is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Hoang Huy Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoang Huy Investment 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 Hoang Huy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoang Huy Investment has no effect on the direction of Visa i.e., Visa and Hoang Huy go up and down completely randomly.

Pair Corralation between Visa and Hoang Huy

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.66 times more return on investment than Hoang Huy. However, Visa Class A is 1.52 times less risky than Hoang Huy. It trades about -0.14 of its potential returns per unit of risk. Hoang Huy Investment is currently generating about -0.21 per unit of risk. If you would invest  31,589  in Visa Class A on October 15, 2024 and sell it today you would lose (818.00) from holding Visa Class A or give up 2.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Visa Class A  vs.  Hoang Huy Investment

Visa Class A

Risk-Adjusted Performance

11 of 100

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 February 2025.

Hoang Huy Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hoang Huy Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hoang Huy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Visa and Hoang Huy

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

The idea behind Visa Class A and Hoang Huy Investment 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.