Correlation Between Visa and SavMobi Technology

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

Diversification Opportunities for Visa and SavMobi Technology

-0.5

Correlation Coefficient

Visa  SavMobi Technology

Very good diversification

The 3 months correlation between Visa and SavMobi is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SavMobi Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SavMobi Technology 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 SavMobi Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SavMobi Technology has no effect on the direction of Visa i.e., Visa and SavMobi Technology go up and down completely randomly.

Pair Corralation between Visa and SavMobi Technology

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.12 times more return on investment than SavMobi Technology. However, Visa Class A is 8.39 times less risky than SavMobi Technology. It trades about 0.22 of its potential returns per unit of risk. SavMobi Technology is currently generating about 0.0 per unit of risk. If you would invest  27,442  in Visa Class A on September 30, 2024 and sell it today you would earn a total of  4,424  from holding Visa Class A or generate 16.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Visa Class A  vs.  SavMobi Technology

Visa Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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.

SavMobi Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Visa and SavMobi Technology

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

The idea behind Visa Class A and SavMobi Technology 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.