Correlation Between Visa and MK Real

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

Diversification Opportunities for Visa and MK Real

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Visa and MK Real is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and MK Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MK Real Estate 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 MK Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MK Real Estate has no effect on the direction of Visa i.e., Visa and MK Real go up and down completely randomly.

Pair Corralation between Visa and MK Real

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.58 times more return on investment than MK Real. However, Visa Class A is 1.73 times less risky than MK Real. It trades about 0.07 of its potential returns per unit of risk. MK Real Estate is currently generating about -0.21 per unit of risk. If you would invest  31,101  in Visa Class A on October 7, 2024 and sell it today you would earn a total of  390.00  from holding Visa Class A or generate 1.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.0%
ValuesDaily Returns

Visa Class A  vs.  MK Real Estate

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.
MK Real Estate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MK Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, MK Real is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Visa and MK Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and MK Real

The main advantage of trading using opposite Visa and MK Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, MK Real 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 MK Real will offset losses from the drop in MK Real's long position.
The idea behind Visa Class A and MK Real Estate 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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