Correlation Between Visa and Spago Nanomedical

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

Diversification Opportunities for Visa and Spago Nanomedical

-0.67

Correlation Coefficient

Visa  Spago Nanomedical

Excellent diversification

The 3 months correlation between Visa and Spago is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Spago Nanomedical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spago Nanomedical 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 Spago Nanomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spago Nanomedical has no effect on the direction of Visa i.e., Visa and Spago Nanomedical go up and down completely randomly.

Pair Corralation between Visa and Spago Nanomedical

Taking into account the 90-day investment horizon Visa is expected to generate 186.72 times less return on investment than Spago Nanomedical. But when comparing it to its historical volatility, Visa Class A is 4.55 times less risky than Spago Nanomedical. It trades about 0.01 of its potential returns per unit of risk. Spago Nanomedical AB is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Spago Nanomedical AB on October 11, 2024 and sell it today you would earn a total of  4.00  from holding Spago Nanomedical AB or generate 23.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	80.95%
Values	Daily Returns

Visa Class A  vs.  Spago Nanomedical AB

Visa Class A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 14 (%) 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.

Spago Nanomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spago Nanomedical AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Spago Nanomedical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Visa and Spago Nanomedical

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

The idea behind Visa Class A and Spago Nanomedical AB 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.