Correlation Between Visa and Ambertech

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

Diversification Opportunities for Visa and Ambertech

-0.82

Correlation Coefficient

Visa  Ambertech

Pay attention - limited upside

The 3 months correlation between Visa and Ambertech is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Ambertech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambertech 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 Ambertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambertech has no effect on the direction of Visa i.e., Visa and Ambertech go up and down completely randomly.

Pair Corralation between Visa and Ambertech

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.26 times more return on investment than Ambertech. However, Visa Class A is 3.81 times less risky than Ambertech. It trades about 0.09 of its potential returns per unit of risk. Ambertech is currently generating about 0.0 per unit of risk. If you would invest  24,281  in Visa Class A on October 8, 2024 and sell it today you would earn a total of  7,210  from holding Visa Class A or generate 29.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.31%
Values	Daily Returns

Visa Class A  vs.  Ambertech

Visa Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 16 (%) 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.

Ambertech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambertech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Visa and Ambertech

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

The idea behind Visa Class A and Ambertech 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.