Correlation Between Visa and AGEDB Technology

Can any of the company-specific risk be diversified away by investing in both Visa and AGEDB Technology 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 AGEDB Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Visa Inc CDR and AGEDB Technology, you can compare the effects of market volatilities on Visa and AGEDB Technology 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 AGEDB Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and AGEDB Technology.

Diversification Opportunities for Visa and AGEDB Technology

-0.71

Correlation Coefficient

Visa  AGEDB Technology

Pay attention - limited upside

The 3 months correlation between Visa and AGEDB is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Visa Inc CDR and AGEDB Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGEDB Technology 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 Inc CDR are associated (or correlated) with AGEDB Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGEDB Technology has no effect on the direction of Visa i.e., Visa and AGEDB Technology go up and down completely randomly.

Pair Corralation between Visa and AGEDB Technology

Assuming the 90 days trading horizon Visa is expected to generate 26.39 times less return on investment than AGEDB Technology. But when comparing it to its historical volatility, Visa Inc CDR is 27.24 times less risky than AGEDB Technology. It trades about 0.09 of its potential returns per unit of risk. AGEDB Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  15.00  in AGEDB Technology on December 22, 2024 and sell it today you would lose (7.00) from holding AGEDB Technology or give up 46.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Visa Inc CDR  vs.  AGEDB Technology

Visa Inc CDR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc CDR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Visa is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

AGEDB Technology

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AGEDB Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, AGEDB Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and AGEDB Technology

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

The idea behind Visa Inc CDR and AGEDB Technology 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.