Correlation Between Visa and Jai Balaji

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

Diversification Opportunities for Visa and Jai Balaji

-0.03

Correlation Coefficient

Visa  Jai Balaji

Good diversification

The 3 months correlation between Visa and Jai is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Jai Balaji Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jai Balaji Industries 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 Jai Balaji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jai Balaji Industries has no effect on the direction of Visa i.e., Visa and Jai Balaji go up and down completely randomly.

Pair Corralation between Visa and Jai Balaji

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.34 times more return on investment than Jai Balaji. However, Visa Class A is 2.97 times less risky than Jai Balaji. It trades about 0.05 of its potential returns per unit of risk. Jai Balaji Industries is currently generating about -0.2 per unit of risk. If you would invest  31,722  in Visa Class A on October 23, 2024 and sell it today you would earn a total of  240.00  from holding Visa Class A or generate 0.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Visa Class A  vs.  Jai Balaji Industries

Visa Class A

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Jai Balaji Industries

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jai Balaji Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Jai Balaji sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Jai Balaji

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

The idea behind Visa Class A and Jai Balaji Industries 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..