Correlation Between Visa and Asia Tech

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

Diversification Opportunities for Visa and Asia Tech

0.35

Correlation Coefficient

Visa  Asia Tech

Weak diversification

The 3 months correlation between Visa and Asia is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Asia Tech Image in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Tech Image 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 Asia Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Tech Image has no effect on the direction of Visa i.e., Visa and Asia Tech go up and down completely randomly.

Pair Corralation between Visa and Asia Tech

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.3 times more return on investment than Asia Tech. However, Visa Class A is 3.31 times less risky than Asia Tech. It trades about 0.17 of its potential returns per unit of risk. Asia Tech Image is currently generating about 0.04 per unit of risk. If you would invest  28,630  in Visa Class A on October 20, 2024 and sell it today you would earn a total of  3,332  from holding Visa Class A or generate 11.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.85%
Values	Daily Returns

Visa Class A  vs.  Asia Tech Image

Visa Class A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) 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 February 2025.

Asia Tech Image

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Tech Image are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asia Tech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Visa and Asia Tech

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

The idea behind Visa Class A and Asia Tech Image 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.