Correlation Between Visa and Grupa HRC

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

Diversification Opportunities for Visa and Grupa HRC

-0.71

Correlation Coefficient

Visa  Grupa HRC

Pay attention - limited upside

The 3 months correlation between Visa and Grupa is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Grupa HRC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupa HRC SA 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 Grupa HRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupa HRC SA has no effect on the direction of Visa i.e., Visa and Grupa HRC go up and down completely randomly.

Pair Corralation between Visa and Grupa HRC

Taking into account the 90-day investment horizon Visa is expected to generate 2.27 times less return on investment than Grupa HRC. But when comparing it to its historical volatility, Visa Class A is 6.79 times less risky than Grupa HRC. It trades about 0.08 of its potential returns per unit of risk. Grupa HRC SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  86.00  in Grupa HRC SA on August 25, 2024 and sell it today you would lose (4.00) from holding Grupa HRC SA or give up 4.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	69.6%
Values	Daily Returns

Visa Class A  vs.  Grupa HRC SA

Visa Class A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Grupa HRC SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupa HRC SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Visa and Grupa HRC

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

The idea behind Visa Class A and Grupa HRC SA 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 Anywhere module to track or share privately all of your investments from the convenience of any device.