Correlation Between Visa and Rejlers AB

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

Diversification Opportunities for Visa and Rejlers AB

0.54

Correlation Coefficient

Visa  Rejlers AB

Very weak diversification

The 3 months correlation between Visa and Rejlers is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Rejlers AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rejlers AB 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 Rejlers AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rejlers AB has no effect on the direction of Visa i.e., Visa and Rejlers AB go up and down completely randomly.

Pair Corralation between Visa and Rejlers AB

Taking into account the 90-day investment horizon Visa is expected to generate 2.36 times less return on investment than Rejlers AB. But when comparing it to its historical volatility, Visa Class A is 1.56 times less risky than Rejlers AB. It trades about 0.16 of its potential returns per unit of risk. Rejlers AB is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  14,180  in Rejlers AB on December 29, 2024 and sell it today you would earn a total of  4,160  from holding Rejlers AB or generate 29.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Visa Class A  vs.  Rejlers AB

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 12 (%) 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.

Rejlers AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rejlers AB are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward-looking indicators, Rejlers AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Rejlers AB

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

The idea behind Visa Class A and Rejlers AB 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.