Correlation Between AOYAMA TRADING and Visa

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Can any of the company-specific risk be diversified away by investing in both AOYAMA TRADING and Visa 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 AOYAMA TRADING and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AOYAMA TRADING and Visa Inc, you can compare the effects of market volatilities on AOYAMA TRADING and Visa 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 AOYAMA TRADING with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOYAMA TRADING and Visa.

Diversification Opportunities for AOYAMA TRADING and Visa

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between AOYAMA and Visa is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc and AOYAMA TRADING 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 AOYAMA TRADING are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of AOYAMA TRADING i.e., AOYAMA TRADING and Visa go up and down completely randomly.

Pair Corralation between AOYAMA TRADING and Visa

Assuming the 90 days horizon AOYAMA TRADING is expected to generate 4.29 times more return on investment than Visa. However, AOYAMA TRADING is 4.29 times more volatile than Visa Inc. It trades about 0.08 of its potential returns per unit of risk. Visa Inc is currently generating about 0.08 per unit of risk. If you would invest  314.00  in AOYAMA TRADING on September 3, 2024 and sell it today you would earn a total of  1,096  from holding AOYAMA TRADING or generate 349.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

AOYAMA TRADING  vs.  Visa Inc

 Performance 
       Timeline  
AOYAMA TRADING 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in AOYAMA TRADING are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AOYAMA TRADING reported solid returns over the last few months and may actually be approaching a breakup point.
Visa Inc 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Visa exhibited solid returns over the last few months and may actually be approaching a breakup point.

AOYAMA TRADING and Visa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AOYAMA TRADING and Visa

The main advantage of trading using opposite AOYAMA TRADING and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOYAMA TRADING position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.
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The idea behind AOYAMA TRADING and Visa Inc 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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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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