Correlation Between Visa and Ono Pharmaceutical

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

Diversification Opportunities for Visa and Ono Pharmaceutical

0.29

Correlation Coefficient

Visa  Ono Pharmaceutical

Modest diversification

The 3 months correlation between Visa and Ono is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ono Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ono Pharmaceutical 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 Ono Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ono Pharmaceutical has no effect on the direction of Visa i.e., Visa and Ono Pharmaceutical go up and down completely randomly.

Pair Corralation between Visa and Ono Pharmaceutical

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.16 times more return on investment than Ono Pharmaceutical. However, Visa Class A is 6.14 times less risky than Ono Pharmaceutical. It trades about 0.41 of its potential returns per unit of risk. Ono Pharmaceutical Co is currently generating about -0.07 per unit of risk. If you would invest  31,387  in Visa Class A on December 3, 2024 and sell it today you would earn a total of  4,884  from holding Visa Class A or generate 15.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	45.0%
Values	Daily Returns

Visa Class A  vs.  Ono Pharmaceutical Co

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 21 (%) 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.

Ono Pharmaceutical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ono Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Ono Pharmaceutical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and Ono Pharmaceutical

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

The idea behind Visa Class A and Ono Pharmaceutical Co 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.