Correlation Between Visa and KBC GR

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

Diversification Opportunities for Visa and KBC GR

0.6

Correlation Coefficient

Visa  KBC GR

Poor diversification

The 3 months correlation between Visa and KBC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and KBC GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC GR 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 KBC GR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC GR has no effect on the direction of Visa i.e., Visa and KBC GR go up and down completely randomly.

Pair Corralation between Visa and KBC GR

Taking into account the 90-day investment horizon Visa is expected to generate 7.09 times less return on investment than KBC GR. In addition to that, Visa is 1.22 times more volatile than KBC GR. It trades about 0.06 of its total potential returns per unit of risk. KBC GR is currently generating about 0.54 per unit of volatility. If you would invest  6,976  in KBC GR on October 10, 2024 and sell it today you would earn a total of  538.00  from holding KBC GR or generate 7.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

Visa Class A  vs.  KBC GR

Visa Class A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 14 (%) 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.

KBC GR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KBC GR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, KBC GR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Visa and KBC GR

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

The idea behind Visa Class A and KBC GR 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 Transaction History module to view history of all your transactions and understand their impact on performance.