Correlation Between Visa and Krung Thai
Can any of the company-specific risk be diversified away by investing in both Visa and Krung Thai 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 Krung Thai 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 Krung Thai Bank, you can compare the effects of market volatilities on Visa and Krung Thai 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 Krung Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Krung Thai.
Diversification Opportunities for Visa and Krung Thai
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Krung is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Krung Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krung Thai Bank 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 Krung Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krung Thai Bank has no effect on the direction of Visa i.e., Visa and Krung Thai go up and down completely randomly.
Pair Corralation between Visa and Krung Thai
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.76 times more return on investment than Krung Thai. However, Visa Class A is 1.32 times less risky than Krung Thai. It trades about 0.08 of its potential returns per unit of risk. Krung Thai Bank is currently generating about 0.02 per unit of risk. If you would invest 23,668 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 7,651 from holding Visa Class A or generate 32.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.33% |
| Values | Daily Returns |
Visa Class A vs. Krung Thai Bank
Performance |
| Timeline |
| Visa Class A |
| Krung Thai Bank |
Visa and Krung Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Krung Thai
The main advantage of trading using opposite Visa and Krung Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Krung Thai 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 Krung Thai will offset losses from the drop in Krung Thai's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Krung Thai vs. Supalai Public | Krung Thai vs. Thai Oil Public | Krung Thai vs. The Erawan Group | Krung Thai vs. Ditto Public |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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