Correlation Between Visa and Schweiter Technologies

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

Diversification Opportunities for Visa and Schweiter Technologies

0.77

Correlation Coefficient

Visa  Schweiter Technologies

Poor diversification

The 3 months correlation between Visa and Schweiter is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies 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 Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Visa i.e., Visa and Schweiter Technologies go up and down completely randomly.

Pair Corralation between Visa and Schweiter Technologies

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.48 times more return on investment than Schweiter Technologies. However, Visa Class A is 2.09 times less risky than Schweiter Technologies. It trades about 0.22 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about 0.05 per unit of risk. If you would invest  30,938  in Visa Class A on December 4, 2024 and sell it today you would earn a total of  4,285  from holding Visa Class A or generate 13.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Visa Class A  vs.  Schweiter Technologies AG

Visa Class A

Risk-Adjusted Performance

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.

Schweiter Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Schweiter Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Visa and Schweiter Technologies

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

The idea behind Visa Class A and Schweiter Technologies AG 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.