Correlation Between Visa and Asiabest Group

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

Diversification Opportunities for Visa and Asiabest Group

0.77

Correlation Coefficient

Visa  Asiabest Group

Poor diversification

The 3 months correlation between Visa and Asiabest is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Asiabest Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiabest Group Inter 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 Asiabest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiabest Group Inter has no effect on the direction of Visa i.e., Visa and Asiabest Group go up and down completely randomly.

Pair Corralation between Visa and Asiabest Group

Taking into account the 90-day investment horizon Visa is expected to generate 20.94 times less return on investment than Asiabest Group. But when comparing it to its historical volatility, Visa Class A is 7.04 times less risky than Asiabest Group. It trades about 0.09 of its potential returns per unit of risk. Asiabest Group International is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Asiabest Group International on September 24, 2024 and sell it today you would earn a total of  2,220  from holding Asiabest Group International or generate 555.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	61.45%
Values	Daily Returns

Visa Class A  vs.  Asiabest Group International

Visa Class A

Risk-Adjusted Performance

17 of 100

OK

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.

Asiabest Group Inter

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days Asiabest Group International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady technical and fundamental indicators, Asiabest Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Asiabest Group

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

The idea behind Visa Class A and Asiabest Group International 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.