Correlation Between Visa and Bangkok Bank
Can any of the company-specific risk be diversified away by investing in both Visa and Bangkok Bank 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 Bangkok Bank 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 Bangkok Bank Public, you can compare the effects of market volatilities on Visa and Bangkok Bank 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 Bangkok Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Bangkok Bank.
Diversification Opportunities for Visa and Bangkok Bank
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Bangkok is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bangkok Bank Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Bank Public 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 Bangkok Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Bank Public has no effect on the direction of Visa i.e., Visa and Bangkok Bank go up and down completely randomly.
Pair Corralation between Visa and Bangkok Bank
Taking into account the 90-day investment horizon Visa is expected to generate 4.59 times less return on investment than Bangkok Bank. But when comparing it to its historical volatility, Visa Class A is 2.69 times less risky than Bangkok Bank. It trades about 0.13 of its potential returns per unit of risk. Bangkok Bank Public is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 380.00 in Bangkok Bank Public on September 19, 2024 and sell it today you would earn a total of 35.00 from holding Bangkok Bank Public or generate 9.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Bangkok Bank Public
Performance |
| Timeline |
| Visa Class A |
| Bangkok Bank Public |
Visa and Bangkok Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Bangkok Bank
The main advantage of trading using opposite Visa and Bangkok Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Bangkok Bank 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 Bangkok Bank will offset losses from the drop in Bangkok Bank's long position.The idea behind Visa Class A and Bangkok Bank Public 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.| Bangkok Bank vs. Morningstar Unconstrained Allocation | Bangkok Bank vs. Bondbloxx ETF Trust | Bangkok Bank vs. Spring Valley Acquisition | Bangkok Bank vs. Bondbloxx ETF Trust |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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