Correlation Between Visa and SSC Technologies

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

Diversification Opportunities for Visa and SSC Technologies

0.7

Correlation Coefficient

Visa  SSC Technologies

Poor diversification

The 3 months correlation between Visa and SSC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SSC Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSC Technologies Holdings 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 SSC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSC Technologies Holdings has no effect on the direction of Visa i.e., Visa and SSC Technologies go up and down completely randomly.

Pair Corralation between Visa and SSC Technologies

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.82 times more return on investment than SSC Technologies. However, Visa Class A is 1.22 times less risky than SSC Technologies. It trades about 0.15 of its potential returns per unit of risk. SSC Technologies Holdings is currently generating about 0.09 per unit of risk. If you would invest  27,875  in Visa Class A on October 15, 2024 and sell it today you would earn a total of  2,896  from holding Visa Class A or generate 10.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  SSC Technologies Holdings

Visa Class A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) 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 February 2025.

SSC Technologies Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SSC Technologies Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SSC Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Visa and SSC Technologies

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

The idea behind Visa Class A and SSC Technologies Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.