Correlation Between Visa and Ainsworth Game

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

Diversification Opportunities for Visa and Ainsworth Game

0.27

Correlation Coefficient

Visa  Ainsworth Game

Modest diversification

The 3 months correlation between Visa and Ainsworth is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ainsworth Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ainsworth Game Technology 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 Ainsworth Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ainsworth Game Technology has no effect on the direction of Visa i.e., Visa and Ainsworth Game go up and down completely randomly.

Pair Corralation between Visa and Ainsworth Game

Taking into account the 90-day investment horizon Visa is expected to generate 1.11 times less return on investment than Ainsworth Game. But when comparing it to its historical volatility, Visa Class A is 4.88 times less risky than Ainsworth Game. It trades about 0.17 of its potential returns per unit of risk. Ainsworth Game Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  53.00  in Ainsworth Game Technology on December 28, 2024 and sell it today you would earn a total of  2.00  from holding Ainsworth Game Technology or generate 3.77% return on investment over 90 days.

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

Visa Class A  vs.  Ainsworth Game Technology

Visa Class A

Risk-Adjusted Performance

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 April 2025.

Ainsworth Game Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ainsworth Game Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ainsworth Game reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Ainsworth Game

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

The idea behind Visa Class A and Ainsworth Game Technology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.