Correlation Between Visa and Wattana Karnpaet

Can any of the company-specific risk be diversified away by investing in both Visa and Wattana Karnpaet 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 Wattana Karnpaet 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 Wattana Karnpaet Public, you can compare the effects of market volatilities on Visa and Wattana Karnpaet 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 Wattana Karnpaet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Wattana Karnpaet.

Diversification Opportunities for Visa and Wattana Karnpaet

0.07

Correlation Coefficient

Visa  Wattana Karnpaet

Significant diversification

The 3 months correlation between Visa and Wattana is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Wattana Karnpaet Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wattana Karnpaet 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 Wattana Karnpaet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wattana Karnpaet Public has no effect on the direction of Visa i.e., Visa and Wattana Karnpaet go up and down completely randomly.

Pair Corralation between Visa and Wattana Karnpaet

Taking into account the 90-day investment horizon Visa is expected to generate 1.91 times less return on investment than Wattana Karnpaet. But when comparing it to its historical volatility, Visa Class A is 4.27 times less risky than Wattana Karnpaet. It trades about 0.14 of its potential returns per unit of risk. Wattana Karnpaet Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,200  in Wattana Karnpaet Public on September 5, 2024 and sell it today you would earn a total of  800.00  from holding Wattana Karnpaet Public or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Visa Class A  vs.  Wattana Karnpaet Public

Visa Class A

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Wattana Karnpaet Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wattana Karnpaet Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Wattana Karnpaet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Wattana Karnpaet

The main advantage of trading using opposite Visa and Wattana Karnpaet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Wattana Karnpaet 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 Wattana Karnpaet will offset losses from the drop in Wattana Karnpaet's long position.

The idea behind Visa Class A and Wattana Karnpaet 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.