Correlation Between Visa and Silgo Retail

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

Diversification Opportunities for Visa and Silgo Retail

-0.51

Correlation Coefficient

Visa  Silgo Retail

Excellent diversification

The 3 months correlation between Visa and Silgo is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Silgo Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgo Retail Limited 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 Silgo Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgo Retail Limited has no effect on the direction of Visa i.e., Visa and Silgo Retail go up and down completely randomly.

Pair Corralation between Visa and Silgo Retail

Taking into account the 90-day investment horizon Visa is expected to generate 4.42 times less return on investment than Silgo Retail. But when comparing it to its historical volatility, Visa Class A is 4.01 times less risky than Silgo Retail. It trades about 0.13 of its potential returns per unit of risk. Silgo Retail Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,770  in Silgo Retail Limited on September 18, 2024 and sell it today you would earn a total of  314.00  from holding Silgo Retail Limited or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Silgo Retail Limited

Visa Class A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Silgo Retail Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silgo Retail Limited 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 essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Visa and Silgo Retail

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

The idea behind Visa Class A and Silgo Retail Limited 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.