Correlation Between Visa and Angel One

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

Diversification Opportunities for Visa and Angel One

0.48

Correlation Coefficient

Visa  Angel One

Very weak diversification

The 3 months correlation between Visa and Angel is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Angel One Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel One Limited 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 Angel One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel One Limited has no effect on the direction of Visa i.e., Visa and Angel One go up and down completely randomly.

Pair Corralation between Visa and Angel One

Taking into account the 90-day investment horizon Visa is expected to generate 1.04 times less return on investment than Angel One. But when comparing it to its historical volatility, Visa Class A is 3.31 times less risky than Angel One. It trades about 0.23 of its potential returns per unit of risk. Angel One Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  256,170  in Angel One Limited on September 28, 2024 and sell it today you would earn a total of  34,225  from holding Angel One Limited or generate 13.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Visa Class A  vs.  Angel One Limited

Visa Class A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) 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.

Angel One Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Angel One Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Angel One displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Angel One

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

The idea behind Visa Class A and Angel One Limited 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.