Correlation Between Visa and Thai Steel
Can any of the company-specific risk be diversified away by investing in both Visa and Thai Steel 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 Thai Steel 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 Thai Steel Cable, you can compare the effects of market volatilities on Visa and Thai Steel 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 Thai Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Thai Steel.
Diversification Opportunities for Visa and Thai Steel
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Thai is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Thai Steel Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Steel Cable 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 Thai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Steel Cable has no effect on the direction of Visa i.e., Visa and Thai Steel go up and down completely randomly.
Pair Corralation between Visa and Thai Steel
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.75 times more return on investment than Thai Steel. However, Visa is 1.75 times more volatile than Thai Steel Cable. It trades about 0.29 of its potential returns per unit of risk. Thai Steel Cable is currently generating about 0.13 per unit of risk. If you would invest 27,442 in Visa Class A on August 30, 2024 and sell it today you would earn a total of 4,028 from holding Visa Class A or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.35% |
| Values | Daily Returns |
Visa Class A vs. Thai Steel Cable
Performance |
| Timeline |
| Visa Class A |
| Thai Steel Cable |
Visa and Thai Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Thai Steel
The main advantage of trading using opposite Visa and Thai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Thai Steel 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 Thai Steel will offset losses from the drop in Thai Steel's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Thai Steel vs. CP ALL Public | Thai Steel vs. Bangkok Dusit Medical | Thai Steel vs. Central Pattana Public | Thai Steel vs. Advanced Info Service |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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