Correlation Between Visa and Affluent Medical

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

Diversification Opportunities for Visa and Affluent Medical

0.14

Correlation Coefficient

Visa  Affluent Medical

Average diversification

The 3 months correlation between Visa and Affluent is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Affluent Medical SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affluent Medical SAS 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 Affluent Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affluent Medical SAS has no effect on the direction of Visa i.e., Visa and Affluent Medical go up and down completely randomly.

Pair Corralation between Visa and Affluent Medical

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.52 times more return on investment than Affluent Medical. However, Visa Class A is 1.94 times less risky than Affluent Medical. It trades about 0.13 of its potential returns per unit of risk. Affluent Medical SAS is currently generating about 0.04 per unit of risk. If you would invest  31,478  in Visa Class A on December 28, 2024 and sell it today you would earn a total of  2,807  from holding Visa Class A or generate 8.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Visa Class A  vs.  Affluent Medical SAS

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 10 (%) 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.

Affluent Medical SAS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Affluent Medical SAS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Affluent Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Affluent Medical

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

The idea behind Visa Class A and Affluent Medical SAS 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.