Correlation Between Visa and Maison Solutions

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

Diversification Opportunities for Visa and Maison Solutions

-0.01

Correlation Coefficient

Visa  Maison Solutions

Good diversification

The 3 months correlation between Visa and Maison is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Maison Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maison Solutions 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 Maison Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maison Solutions has no effect on the direction of Visa i.e., Visa and Maison Solutions go up and down completely randomly.

Pair Corralation between Visa and Maison Solutions

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.15 times more return on investment than Maison Solutions. However, Visa Class A is 6.51 times less risky than Maison Solutions. It trades about 0.12 of its potential returns per unit of risk. Maison Solutions is currently generating about 0.02 per unit of risk. If you would invest  32,037  in Visa Class A on December 26, 2024 and sell it today you would earn a total of  2,425  from holding Visa Class A or generate 7.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  Maison Solutions

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 9 (%) 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.

Maison Solutions

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Maison Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Maison Solutions may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Visa and Maison Solutions

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

The idea behind Visa Class A and Maison Solutions 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.