Correlation Between Visa Steel and Cartrade Tech

Can any of the company-specific risk be diversified away by investing in both Visa Steel and Cartrade Tech 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 Steel and Cartrade Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Visa Steel Limited and Cartrade Tech Limited, you can compare the effects of market volatilities on Visa Steel and Cartrade Tech 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 Steel with a short position of Cartrade Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa Steel and Cartrade Tech.

Diversification Opportunities for Visa Steel and Cartrade Tech

-0.41

Correlation Coefficient

Visa Steel  Cartrade Tech

Very good diversification

The 3 months correlation between Visa and Cartrade is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Visa Steel Limited and Cartrade Tech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartrade Tech Limited and Visa Steel 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 Steel Limited are associated (or correlated) with Cartrade Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartrade Tech Limited has no effect on the direction of Visa Steel i.e., Visa Steel and Cartrade Tech go up and down completely randomly.

Pair Corralation between Visa Steel and Cartrade Tech

Assuming the 90 days trading horizon Visa Steel is expected to generate 1.21 times less return on investment than Cartrade Tech. But when comparing it to its historical volatility, Visa Steel Limited is 1.38 times less risky than Cartrade Tech. It trades about 0.17 of its potential returns per unit of risk. Cartrade Tech Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  137,395  in Cartrade Tech Limited on October 4, 2024 and sell it today you would earn a total of  11,175  from holding Cartrade Tech Limited or generate 8.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Steel Limited  vs.  Cartrade Tech Limited

Visa Steel Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Steel Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Visa Steel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cartrade Tech Limited

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cartrade Tech Limited are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Cartrade Tech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa Steel and Cartrade Tech

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

The idea behind Visa Steel Limited and Cartrade Tech 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.