Correlation Between Visa and Icares Medicus

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

Diversification Opportunities for Visa and Icares Medicus

-0.84

Correlation Coefficient

Visa  Icares Medicus

Pay attention - limited upside

The 3 months correlation between Visa and Icares is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Icares Medicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icares Medicus 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 Icares Medicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icares Medicus has no effect on the direction of Visa i.e., Visa and Icares Medicus go up and down completely randomly.

Pair Corralation between Visa and Icares Medicus

Taking into account the 90-day investment horizon Visa is expected to generate 1.24 times less return on investment than Icares Medicus. But when comparing it to its historical volatility, Visa Class A is 2.9 times less risky than Icares Medicus. It trades about 0.09 of its potential returns per unit of risk. Icares Medicus is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,175  in Icares Medicus on September 24, 2024 and sell it today you would earn a total of  3,475  from holding Icares Medicus or generate 42.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.59%
Values	Daily Returns

Visa Class A  vs.  Icares Medicus

Visa Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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.

Icares Medicus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icares Medicus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Visa and Icares Medicus

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

The idea behind Visa Class A and Icares Medicus 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.