Correlation Between Visa and Puda Coal

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

Diversification Opportunities for Visa and Puda Coal

0.0

Correlation Coefficient

Visa  Puda Coal

Pay attention - limited upside

The 3 months correlation between Visa and Puda is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Puda Coal New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puda Coal New 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 Puda Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puda Coal New has no effect on the direction of Visa i.e., Visa and Puda Coal go up and down completely randomly.

Pair Corralation between Visa and Puda Coal

If you would invest  32,091  in Visa Class A on October 27, 2024 and sell it today you would earn a total of  929.00  from holding Visa Class A or generate 2.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Visa Class A  vs.  Puda Coal New

Visa Class A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) 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.

Puda Coal New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Puda Coal New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Puda Coal is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Puda Coal

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

The idea behind Visa Class A and Puda Coal New 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.