Correlation Between Visa and Awardit AB

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

Diversification Opportunities for Visa and Awardit AB

0.4

Correlation Coefficient

Visa  Awardit AB

Very weak diversification

The 3 months correlation between Visa and Awardit is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Awardit AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awardit AB 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 Awardit AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awardit AB has no effect on the direction of Visa i.e., Visa and Awardit AB go up and down completely randomly.

Pair Corralation between Visa and Awardit AB

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.83 times more return on investment than Awardit AB. However, Visa Class A is 1.21 times less risky than Awardit AB. It trades about 0.12 of its potential returns per unit of risk. Awardit AB is currently generating about 0.02 per unit of risk. If you would invest  28,680  in Visa Class A on September 13, 2024 and sell it today you would earn a total of  2,699  from holding Visa Class A or generate 9.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.89%
Values	Daily Returns

Visa Class A  vs.  Awardit AB

Visa Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) 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 January 2025.

Awardit AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Awardit AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Awardit AB 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 Awardit AB

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

The idea behind Visa Class A and Awardit 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.