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
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Krung is 0.09. 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 0.4 times more return on investment than Krung Thai. However, Visa Class A is 2.5 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 22,017 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 9,491 from holding Visa Class A or generate 43.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.14% |
| 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. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Krung Thai vs. China Merchants Bank | Krung Thai vs. PT Bank Central | Krung Thai vs. DBS Group Holdings | Krung Thai vs. State Bank of |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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