Correlation Between Visa and Cirtek Holdings

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

Diversification Opportunities for Visa and Cirtek Holdings

0.07

Correlation Coefficient

Visa  Cirtek Holdings

Significant diversification

The 3 months correlation between Visa and Cirtek is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cirtek Holdings Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirtek Holdings Phil 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 Cirtek Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirtek Holdings Phil has no effect on the direction of Visa i.e., Visa and Cirtek Holdings go up and down completely randomly.

Pair Corralation between Visa and Cirtek Holdings

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.67 times more return on investment than Cirtek Holdings. However, Visa Class A is 1.48 times less risky than Cirtek Holdings. It trades about 0.08 of its potential returns per unit of risk. Cirtek Holdings Philippines is currently generating about -0.03 per unit of risk. If you would invest  22,590  in Visa Class A on September 28, 2024 and sell it today you would earn a total of  9,217  from holding Visa Class A or generate 40.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	62.89%
Values	Daily Returns

Visa Class A  vs.  Cirtek Holdings Philippines

Visa Class A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) 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.

Cirtek Holdings Phil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cirtek Holdings Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Visa and Cirtek Holdings

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

The idea behind Visa Class A and Cirtek Holdings Philippines 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.