Correlation Between Visa and Berkah Beton

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

Diversification Opportunities for Visa and Berkah Beton

-0.62

Correlation Coefficient

Visa  Berkah Beton

Excellent diversification

The 3 months correlation between Visa and Berkah is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Berkah Beton Sadaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkah Beton Sadaya 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 Berkah Beton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkah Beton Sadaya has no effect on the direction of Visa i.e., Visa and Berkah Beton go up and down completely randomly.

Pair Corralation between Visa and Berkah Beton

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.15 times more return on investment than Berkah Beton. However, Visa Class A is 6.61 times less risky than Berkah Beton. It trades about 0.09 of its potential returns per unit of risk. Berkah Beton Sadaya is currently generating about -0.12 per unit of risk. If you would invest  21,003  in Visa Class A on September 4, 2024 and sell it today you would earn a total of  10,662  from holding Visa Class A or generate 50.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.95%
Values	Daily Returns

Visa Class A  vs.  Berkah Beton Sadaya

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.

Berkah Beton Sadaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berkah Beton Sadaya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Visa and Berkah Beton

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

The idea behind Visa Class A and Berkah Beton Sadaya 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.