Correlation Between Visa and Andon Health

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

Diversification Opportunities for Visa and Andon Health

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Visa and Andon is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Andon Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andon Health 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 Andon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andon Health has no effect on the direction of Visa i.e., Visa and Andon Health go up and down completely randomly.

Pair Corralation between Visa and Andon Health

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.8 times more return on investment than Andon Health. However, Visa Class A is 1.26 times less risky than Andon Health. It trades about 0.34 of its potential returns per unit of risk. Andon Health Co is currently generating about -0.15 per unit of risk. If you would invest  29,018  in Visa Class A on September 2, 2024 and sell it today you would earn a total of  2,490  from holding Visa Class A or generate 8.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Visa Class A  vs.  Andon Health Co

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.
Andon Health 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Andon Health Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Andon Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Visa and Andon Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Andon Health

The main advantage of trading using opposite Visa and Andon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Andon Health 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 Andon Health will offset losses from the drop in Andon Health's long position.
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The idea behind Visa Class A and Andon Health 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.
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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