Correlation Between Visa and V-Mart Retail

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

Diversification Opportunities for Visa and V-Mart Retail

-0.49

Correlation Coefficient

Visa  V-Mart Retail

Very good diversification

The 3 months correlation between Visa and V-Mart is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail 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 V-Mart Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of Visa i.e., Visa and V-Mart Retail go up and down completely randomly.

Pair Corralation between Visa and V-Mart Retail

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.44 times more return on investment than V-Mart Retail. However, Visa Class A is 2.25 times less risky than V-Mart Retail. It trades about 0.13 of its potential returns per unit of risk. V Mart Retail Limited is currently generating about -0.17 per unit of risk. If you would invest  31,478  in Visa Class A on December 28, 2024 and sell it today you would earn a total of  2,807  from holding Visa Class A or generate 8.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Visa Class A  vs.  V Mart Retail Limited

Visa Class A

Risk-Adjusted Performance

Good

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 weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

V Mart Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Visa and V-Mart Retail

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

The idea behind Visa Class A and V Mart 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.