Correlation Between Visa and Adiuvo Investment

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

Diversification Opportunities for Visa and Adiuvo Investment

0.64

Correlation Coefficient

Visa  Adiuvo Investment

Poor diversification

The 3 months correlation between Visa and Adiuvo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Adiuvo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adiuvo Investment 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 Adiuvo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adiuvo Investment has no effect on the direction of Visa i.e., Visa and Adiuvo Investment go up and down completely randomly.

Pair Corralation between Visa and Adiuvo Investment

Taking into account the 90-day investment horizon Visa is expected to generate 17.73 times less return on investment than Adiuvo Investment. But when comparing it to its historical volatility, Visa Class A is 11.14 times less risky than Adiuvo Investment. It trades about 0.15 of its potential returns per unit of risk. Adiuvo Investment SA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Adiuvo Investment SA on December 27, 2024 and sell it today you would earn a total of  95.00  from holding Adiuvo Investment SA or generate 287.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Adiuvo Investment SA

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) 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 April 2025.

Adiuvo Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Adiuvo Investment SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Adiuvo Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Adiuvo Investment

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

The idea behind Visa Class A and Adiuvo Investment SA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.