Correlation Between Visa and MCB GROUP

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

Diversification Opportunities for Visa and MCB GROUP

-0.48

Correlation Coefficient

Visa  MCB GROUP

Very good diversification

The 3 months correlation between Visa and MCB is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and MCB GROUP LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB GROUP LIMITED 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 MCB GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB GROUP LIMITED has no effect on the direction of Visa i.e., Visa and MCB GROUP go up and down completely randomly.

Pair Corralation between Visa and MCB GROUP

Taking into account the 90-day investment horizon Visa is expected to generate 1.29 times less return on investment than MCB GROUP. In addition to that, Visa is 1.44 times more volatile than MCB GROUP LIMITED. It trades about 0.07 of its total potential returns per unit of risk. MCB GROUP LIMITED is currently generating about 0.13 per unit of volatility. If you would invest  30,000  in MCB GROUP LIMITED on October 15, 2024 and sell it today you would earn a total of  16,800  from holding MCB GROUP LIMITED or generate 56.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.59%
Values	Daily Returns

Visa Class A  vs.  MCB GROUP LIMITED

Visa Class A

Risk-Adjusted Performance

11 of 100

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 February 2025.

MCB GROUP LIMITED

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MCB GROUP LIMITED are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, MCB GROUP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Visa and MCB GROUP

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

The idea behind Visa Class A and MCB GROUP LIMITED 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.