Correlation Between Visa and Laser Photonics

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

Diversification Opportunities for Visa and Laser Photonics

-0.19

Correlation Coefficient

Visa  Laser Photonics

Good diversification

The 3 months correlation between Visa and Laser is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Laser Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laser Photonics 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 Laser Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laser Photonics has no effect on the direction of Visa i.e., Visa and Laser Photonics go up and down completely randomly.

Pair Corralation between Visa and Laser Photonics

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Laser Photonics. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 4.93 times less risky than Laser Photonics. The stock trades about -0.02 of its potential returns per unit of risk. The Laser Photonics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  296.00  in Laser Photonics on May 6, 2025 and sell it today you would lose (28.00) from holding Laser Photonics or give up 9.46% of portfolio value over 90 days.

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

Visa Class A  vs.  Laser Photonics

Visa Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Visa Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Laser Photonics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Laser Photonics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Laser Photonics is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Visa and Laser Photonics

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

The idea behind Visa Class A and Laser Photonics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..