Correlation Between Visa and TSINGTAO H
Can any of the company-specific risk be diversified away by investing in both Visa and TSINGTAO H 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 TSINGTAO H 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 TSINGTAO H , you can compare the effects of market volatilities on Visa and TSINGTAO H 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 TSINGTAO H. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and TSINGTAO H.
Diversification Opportunities for Visa and TSINGTAO H
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and TSINGTAO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and TSINGTAO H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSINGTAO H 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 TSINGTAO H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSINGTAO H has no effect on the direction of Visa i.e., Visa and TSINGTAO H go up and down completely randomly.
Pair Corralation between Visa and TSINGTAO H
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the TSINGTAO H. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 3.18 times less risky than TSINGTAO H. The stock trades about -0.14 of its potential returns per unit of risk. The TSINGTAO H is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 625.00 in TSINGTAO H on January 26, 2024 and sell it today you would earn a total of 35.00 from holding TSINGTAO H or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Visa Class A vs. TSINGTAO H
Performance |
| Timeline |
| Visa Class A |
| TSINGTAO H |
Visa and TSINGTAO H Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and TSINGTAO H
The main advantage of trading using opposite Visa and TSINGTAO H positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, TSINGTAO H 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 TSINGTAO H will offset losses from the drop in TSINGTAO H's long position.The idea behind Visa Class A and TSINGTAO H 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.| TSINGTAO H vs. COSMOSTEEL HLDGS | TSINGTAO H vs. STEEL DYNAMICS | TSINGTAO H vs. Vienna Insurance Group | TSINGTAO H vs. QBE Insurance Group |
Check out your portfolio center.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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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