Correlation Between Visa and Kore Potash

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

Diversification Opportunities for Visa and Kore Potash

-0.21

Correlation Coefficient

Visa  Kore Potash

Very good diversification

The 3 months correlation between Visa and Kore is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Kore Potash Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kore Potash 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 Kore Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kore Potash Plc has no effect on the direction of Visa i.e., Visa and Kore Potash go up and down completely randomly.

Pair Corralation between Visa and Kore Potash

Taking into account the 90-day investment horizon Visa is expected to generate 5.19 times less return on investment than Kore Potash. But when comparing it to its historical volatility, Visa Class A is 7.04 times less risky than Kore Potash. It trades about 0.09 of its potential returns per unit of risk. Kore Potash Plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,600  in Kore Potash Plc on September 14, 2024 and sell it today you would earn a total of  3,900  from holding Kore Potash Plc or generate 243.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

Visa Class A  vs.  Kore Potash Plc

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

Kore Potash Plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kore Potash Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Kore Potash may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visa and Kore Potash

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

The idea behind Visa Class A and Kore Potash 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.