Correlation Between Visa and JD Bancshares

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

Diversification Opportunities for Visa and JD Bancshares

0.84

Correlation Coefficient

Visa  JD Bancshares

Very poor diversification

The 3 months correlation between Visa and JDVB is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and JD Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Bancshares 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 JD Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Bancshares has no effect on the direction of Visa i.e., Visa and JD Bancshares go up and down completely randomly.

Pair Corralation between Visa and JD Bancshares

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the JD Bancshares. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.01 times less risky than JD Bancshares. The stock trades about -0.03 of its potential returns per unit of risk. The JD Bancshares is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,350  in JD Bancshares on September 19, 2024 and sell it today you would earn a total of  99.00  from holding JD Bancshares or generate 4.21% return on investment over 90 days.

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

Visa Class A  vs.  JD Bancshares

Visa Class A

Risk-Adjusted Performance

8 of 100

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 inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JD Bancshares

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD Bancshares are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JD Bancshares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visa and JD Bancshares

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

The idea behind Visa Class A and JD Bancshares 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.