Correlation Between Visa and FormPipe Software

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

Diversification Opportunities for Visa and FormPipe Software

-0.13

Correlation Coefficient

Visa  FormPipe Software

Good diversification

The 3 months correlation between Visa and FormPipe is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and FormPipe Software AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormPipe Software 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 FormPipe Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormPipe Software has no effect on the direction of Visa i.e., Visa and FormPipe Software go up and down completely randomly.

Pair Corralation between Visa and FormPipe Software

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.87 times more return on investment than FormPipe Software. However, Visa Class A is 1.15 times less risky than FormPipe Software. It trades about 0.11 of its potential returns per unit of risk. FormPipe Software AB is currently generating about 0.09 per unit of risk. If you would invest  31,957  in Visa Class A on April 20, 2025 and sell it today you would earn a total of  2,948  from holding Visa Class A or generate 9.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Visa Class A  vs.  FormPipe Software AB

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) 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 August 2025.

FormPipe Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FormPipe Software AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, FormPipe Software may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Visa and FormPipe Software

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

The idea behind Visa Class A and FormPipe Software AB 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.