Correlation Between Visa and Malmbergs Elektriska

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

Diversification Opportunities for Visa and Malmbergs Elektriska

0.46

Correlation Coefficient

Visa  Malmbergs Elektriska

Very weak diversification

The 3 months correlation between Visa and Malmbergs is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Malmbergs Elektriska AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malmbergs Elektriska 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 Malmbergs Elektriska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malmbergs Elektriska has no effect on the direction of Visa i.e., Visa and Malmbergs Elektriska go up and down completely randomly.

Pair Corralation between Visa and Malmbergs Elektriska

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.36 times more return on investment than Malmbergs Elektriska. However, Visa Class A is 2.8 times less risky than Malmbergs Elektriska. It trades about 0.13 of its potential returns per unit of risk. Malmbergs Elektriska AB is currently generating about 0.03 per unit of risk. If you would invest  31,478  in Visa Class A on December 30, 2024 and sell it today you would earn a total of  2,807  from holding Visa Class A or generate 8.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Visa Class A  vs.  Malmbergs Elektriska AB

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 10 (%) 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.

Malmbergs Elektriska

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Malmbergs Elektriska AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Malmbergs Elektriska is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Malmbergs Elektriska

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

The idea behind Visa Class A and Malmbergs Elektriska 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 Global Correlations module to find global opportunities by holding instruments from different markets.