Correlation Between Visa and Sawang Export

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

Diversification Opportunities for Visa and Sawang Export

-0.7

Correlation Coefficient

Visa  Sawang Export

Excellent diversification

The 3 months correlation between Visa and Sawang is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sawang Export Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sawang Export Public 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 Sawang Export. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sawang Export Public has no effect on the direction of Visa i.e., Visa and Sawang Export go up and down completely randomly.

Pair Corralation between Visa and Sawang Export

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.17 times more return on investment than Sawang Export. However, Visa Class A is 5.78 times less risky than Sawang Export. It trades about 0.16 of its potential returns per unit of risk. Sawang Export Public is currently generating about 0.01 per unit of risk. If you would invest  31,478  in Visa Class A on December 29, 2024 and sell it today you would earn a total of  3,508  from holding Visa Class A or generate 11.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Visa Class A  vs.  Sawang Export Public

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.

Sawang Export Public

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Visa and Sawang Export

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

The idea behind Visa Class A and Sawang Export Public 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.