Correlation Between Visa and Soktas Tekstil

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

Diversification Opportunities for Visa and Soktas Tekstil

-0.79

Correlation Coefficient

Visa  Soktas Tekstil

Pay attention - limited upside

The 3 months correlation between Visa and Soktas is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Soktas Tekstil Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soktas Tekstil Sanayi 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 Soktas Tekstil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soktas Tekstil Sanayi has no effect on the direction of Visa i.e., Visa and Soktas Tekstil go up and down completely randomly.

Pair Corralation between Visa and Soktas Tekstil

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.39 times more return on investment than Soktas Tekstil. However, Visa Class A is 2.56 times less risky than Soktas Tekstil. It trades about 0.11 of its potential returns per unit of risk. Soktas Tekstil Sanayi is currently generating about 0.01 per unit of risk. If you would invest  31,435  in Visa Class A on December 19, 2024 and sell it today you would earn a total of  2,042  from holding Visa Class A or generate 6.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Visa Class A  vs.  Soktas Tekstil Sanayi

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 8 (%) 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.

Soktas Tekstil Sanayi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Soktas Tekstil Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Soktas Tekstil is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Visa and Soktas Tekstil

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

The idea behind Visa Class A and Soktas Tekstil Sanayi 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.