Correlation Between Visa and AiMedia Technologies
Can any of the company-specific risk be diversified away by investing in both Visa and AiMedia Technologies 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 AiMedia Technologies 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 AiMedia Technologies, you can compare the effects of market volatilities on Visa and AiMedia Technologies 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 AiMedia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and AiMedia Technologies.
Diversification Opportunities for Visa and AiMedia Technologies
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and AiMedia is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and AiMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AiMedia Technologies 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 AiMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AiMedia Technologies has no effect on the direction of Visa i.e., Visa and AiMedia Technologies go up and down completely randomly.
Pair Corralation between Visa and AiMedia Technologies
Taking into account the 90-day investment horizon Visa is expected to generate 2.69 times less return on investment than AiMedia Technologies. But when comparing it to its historical volatility, Visa Class A is 3.82 times less risky than AiMedia Technologies. It trades about 0.08 of its potential returns per unit of risk. AiMedia Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 34.00 in AiMedia Technologies on August 25, 2024 and sell it today you would earn a total of 37.00 from holding AiMedia Technologies or generate 108.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Visa Class A vs. AiMedia Technologies
Performance |
| Timeline |
| Visa Class A |
| AiMedia Technologies |
Visa and AiMedia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and AiMedia Technologies
The main advantage of trading using opposite Visa and AiMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, AiMedia Technologies 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 AiMedia Technologies will offset losses from the drop in AiMedia Technologies' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| AiMedia Technologies vs. Alto Metals | AiMedia Technologies vs. RLF AgTech | AiMedia Technologies vs. Readytech Holdings | AiMedia Technologies vs. Sky Metals |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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