Correlation Between Visa and Ilika Plc

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

Diversification Opportunities for Visa and Ilika Plc

0.88

Correlation Coefficient

Visa  Ilika Plc

Very poor diversification

The 3 months correlation between Visa and Ilika is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ilika plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilika plc 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 Ilika Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilika plc has no effect on the direction of Visa i.e., Visa and Ilika Plc go up and down completely randomly.

Pair Corralation between Visa and Ilika Plc

Taking into account the 90-day investment horizon Visa is expected to generate 9.28 times less return on investment than Ilika Plc. But when comparing it to its historical volatility, Visa Class A is 5.67 times less risky than Ilika Plc. It trades about 0.11 of its potential returns per unit of risk. Ilika plc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Ilika plc on December 26, 2024 and sell it today you would earn a total of  21.00  from holding Ilika plc or generate 77.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  Ilika plc

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 8 (%) 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.

Ilika plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ilika plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Ilika Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Ilika Plc

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

The idea behind Visa Class A and Ilika plc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.