Correlation Between Visa and PT Indo

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

Diversification Opportunities for Visa and PT Indo

-0.26

Correlation Coefficient

Visa  PT Indo

Very good diversification

The 3 months correlation between Visa and IBOS is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and PT Indo Boga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indo Boga 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 PT Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indo Boga has no effect on the direction of Visa i.e., Visa and PT Indo go up and down completely randomly.

Pair Corralation between Visa and PT Indo

Taking into account the 90-day investment horizon Visa is expected to generate 1.78 times less return on investment than PT Indo. But when comparing it to its historical volatility, Visa Class A is 5.0 times less risky than PT Indo. It trades about 0.13 of its potential returns per unit of risk. PT Indo Boga is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,100  in PT Indo Boga on December 18, 2024 and sell it today you would earn a total of  200.00  from holding PT Indo Boga or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Visa Class A  vs.  PT Indo Boga

Visa Class A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 10 (%) 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.

PT Indo Boga

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indo Boga are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Indo disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and PT Indo

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

The idea behind Visa Class A and PT Indo Boga 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.