Correlation Between Visa and Astar

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

Diversification Opportunities for Visa and Astar

-0.84

Correlation Coefficient

Visa  Astar

Pay attention - limited upside

The 3 months correlation between Visa and Astar is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Astar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astar 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 Astar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astar has no effect on the direction of Visa i.e., Visa and Astar go up and down completely randomly.

Pair Corralation between Visa and Astar

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.15 times more return on investment than Astar. However, Visa Class A is 6.57 times less risky than Astar. It trades about 0.22 of its potential returns per unit of risk. Astar is currently generating about -0.16 per unit of risk. If you would invest  31,455  in Visa Class A on November 28, 2024 and sell it today you would earn a total of  3,754  from holding Visa Class A or generate 11.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	92.06%
Values	Daily Returns

Visa Class A  vs.  Astar

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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 March 2025.

Astar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for Astar shareholders.

Pair Trading with Visa and Astar

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

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