Correlation Between Visa and Rand Mining

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

Diversification Opportunities for Visa and Rand Mining

-0.71

Correlation Coefficient

Visa  Rand Mining

Pay attention - limited upside

The 3 months correlation between Visa and Rand is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Rand Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand Mining 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 Rand Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Mining has no effect on the direction of Visa i.e., Visa and Rand Mining go up and down completely randomly.

Pair Corralation between Visa and Rand Mining

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.44 times more return on investment than Rand Mining. However, Visa Class A is 2.27 times less risky than Rand Mining. It trades about 0.08 of its potential returns per unit of risk. Rand Mining is currently generating about 0.04 per unit of risk. If you would invest  22,075  in Visa Class A on October 23, 2024 and sell it today you would earn a total of  10,177  from holding Visa Class A or generate 46.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.37%
Values	Daily Returns

Visa Class A  vs.  Rand Mining

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.

Rand Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rand Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Visa and Rand Mining

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

The idea behind Visa Class A and Rand Mining 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.