Correlation Between Visa and Lipum AB

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

Diversification Opportunities for Visa and Lipum AB

0.74

Correlation Coefficient

Visa  Lipum AB

Poor diversification

The 3 months correlation between Visa and Lipum is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum AB 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 Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Visa i.e., Visa and Lipum AB go up and down completely randomly.

Pair Corralation between Visa and Lipum AB

Taking into account the 90-day investment horizon Visa is expected to generate 3.04 times less return on investment than Lipum AB. But when comparing it to its historical volatility, Visa Class A is 4.51 times less risky than Lipum AB. It trades about 0.15 of its potential returns per unit of risk. Lipum AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Lipum AB on December 27, 2024 and sell it today you would earn a total of  310.00  from holding Lipum AB or generate 25.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Visa Class A  vs.  Lipum AB

Visa Class A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) 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 April 2025.

Lipum AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lipum AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Lipum AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Lipum AB

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

The idea behind Visa Class A and Lipum AB 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 Commodity Directory module to find actively traded commodities issued by global exchanges.