Correlation Between Visa and Indo Rama

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

Diversification Opportunities for Visa and Indo Rama

-0.26

Correlation Coefficient

Visa  Indo Rama

Very good diversification

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

Pair Corralation between Visa and Indo Rama

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.4 times more return on investment than Indo Rama. However, Visa Class A is 2.51 times less risky than Indo Rama. It trades about 0.14 of its potential returns per unit of risk. Indo Rama Synthetics is currently generating about 0.01 per unit of risk. If you would invest  29,006  in Visa Class A on October 18, 2024 and sell it today you would earn a total of  2,622  from holding Visa Class A or generate 9.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Visa Class A  vs.  Indo Rama Synthetics

Visa Class A

Risk-Adjusted Performance

10 of 100

OK

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 February 2025.

Indo Rama Synthetics

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Visa and Indo Rama

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

The idea behind Visa Class A and Indo Rama Synthetics 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.