Correlation Between Visa and Ringmetall

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

Diversification Opportunities for Visa and Ringmetall

0.01

Correlation Coefficient

Visa  Ringmetall

Significant diversification

The 3 months correlation between Visa and Ringmetall is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ringmetall SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ringmetall SE 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 Ringmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ringmetall SE has no effect on the direction of Visa i.e., Visa and Ringmetall go up and down completely randomly.

Pair Corralation between Visa and Ringmetall

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.3 times more return on investment than Ringmetall. However, Visa Class A is 3.36 times less risky than Ringmetall. It trades about 0.12 of its potential returns per unit of risk. Ringmetall SE is currently generating about 0.02 per unit of risk. If you would invest  31,669  in Visa Class A on December 21, 2024 and sell it today you would earn a total of  2,281  from holding Visa Class A or generate 7.2% return on investment over 90 days.

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

Visa Class A  vs.  Ringmetall SE

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) 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.

Ringmetall SE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ringmetall SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ringmetall is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and Ringmetall

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

The idea behind Visa Class A and Ringmetall SE 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.