Correlation Between Visa and Perfect Corp

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

Diversification Opportunities for Visa and Perfect Corp

0.51

Correlation Coefficient

Visa  Perfect Corp

Very weak diversification

The 3 months correlation between Visa and Perfect is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Perfect Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perfect Corp 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 Perfect Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perfect Corp has no effect on the direction of Visa i.e., Visa and Perfect Corp go up and down completely randomly.

Pair Corralation between Visa and Perfect Corp

Taking into account the 90-day investment horizon Visa is expected to generate 3.98 times less return on investment than Perfect Corp. But when comparing it to its historical volatility, Visa Class A is 7.66 times less risky than Perfect Corp. It trades about 0.19 of its potential returns per unit of risk. Perfect Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  190.00  in Perfect Corp on October 23, 2024 and sell it today you would earn a total of  69.00  from holding Perfect Corp or generate 36.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Perfect Corp

Visa Class A

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 15 (%) 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.

Perfect Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perfect Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Perfect Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Perfect Corp

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

The idea behind Visa Class A and Perfect Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.