Correlation Between Visa and Saga Furs

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

Diversification Opportunities for Visa and Saga Furs

-0.52

Correlation Coefficient

Visa  Saga Furs

Excellent diversification

The 3 months correlation between Visa and Saga is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Saga Furs Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Furs Oyj 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 Saga Furs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Furs Oyj has no effect on the direction of Visa i.e., Visa and Saga Furs go up and down completely randomly.

Pair Corralation between Visa and Saga Furs

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.34 times more return on investment than Saga Furs. However, Visa Class A is 2.92 times less risky than Saga Furs. It trades about 0.08 of its potential returns per unit of risk. Saga Furs Oyj is currently generating about -0.01 per unit of risk. If you would invest  22,017  in Visa Class A on October 3, 2024 and sell it today you would earn a total of  9,587  from holding Visa Class A or generate 43.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Visa Class A  vs.  Saga Furs Oyj

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.

Saga Furs Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saga Furs Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Visa and Saga Furs

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

The idea behind Visa Class A and Saga Furs Oyj 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.