Correlation Between Visa and Aeon Co

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

Diversification Opportunities for Visa and Aeon Co

-0.35

Correlation Coefficient

Visa  Aeon Co

Very good diversification

The 3 months correlation between Visa and Aeon is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Aeon Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Co 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 Aeon Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon Co has no effect on the direction of Visa i.e., Visa and Aeon Co go up and down completely randomly.

Pair Corralation between Visa and Aeon Co

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.74 times more return on investment than Aeon Co. However, Visa Class A is 1.35 times less risky than Aeon Co. It trades about 0.07 of its potential returns per unit of risk. Aeon Co is currently generating about 0.03 per unit of risk. If you would invest  22,072  in Visa Class A on October 12, 2024 and sell it today you would earn a total of  9,188  from holding Visa Class A or generate 41.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Visa Class A  vs.  Aeon Co

Visa Class A

Risk-Adjusted Performance

13 of 100

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 February 2025.

Aeon Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeon Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aeon Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Visa and Aeon Co

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

The idea behind Visa Class A and Aeon Co 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.