Correlation Between Visa and Auden Techno

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

Diversification Opportunities for Visa and Auden Techno

0.16

Correlation Coefficient

Visa  Auden Techno

Average diversification

The 3 months correlation between Visa and Auden is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Auden Techno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auden Techno 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 Auden Techno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auden Techno has no effect on the direction of Visa i.e., Visa and Auden Techno go up and down completely randomly.

Pair Corralation between Visa and Auden Techno

Taking into account the 90-day investment horizon Visa is expected to generate 10.35 times less return on investment than Auden Techno. But when comparing it to its historical volatility, Visa Class A is 1.74 times less risky than Auden Techno. It trades about 0.06 of its potential returns per unit of risk. Auden Techno is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  10,050  in Auden Techno on December 5, 2024 and sell it today you would earn a total of  1,400  from holding Auden Techno or generate 13.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Visa Class A  vs.  Auden Techno

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 23 (%) 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.

Auden Techno

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Auden Techno are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Auden Techno is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Visa and Auden Techno

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

The idea behind Visa Class A and Auden Techno 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.