Correlation Between Itau Unibanco and Thai Union

Can any of the company-specific risk be diversified away by investing in both Itau Unibanco and Thai Union 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 Itau Unibanco and Thai Union into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Itau Unibanco Banco and Thai Union Group, you can compare the effects of market volatilities on Itau Unibanco and Thai Union 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 Itau Unibanco with a short position of Thai Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and Thai Union.

Diversification Opportunities for Itau Unibanco and Thai Union

-0.02

Correlation Coefficient

Itau Unibanco  Thai Union

Good diversification

The 3 months correlation between Itau and Thai is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and Thai Union Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Union Group and Itau Unibanco 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 Itau Unibanco Banco are associated (or correlated) with Thai Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Union Group has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and Thai Union go up and down completely randomly.

Pair Corralation between Itau Unibanco and Thai Union

Given the investment horizon of 90 days Itau Unibanco Banco is expected to generate 1.56 times more return on investment than Thai Union. However, Itau Unibanco is 1.56 times more volatile than Thai Union Group. It trades about 0.05 of its potential returns per unit of risk. Thai Union Group is currently generating about -0.01 per unit of risk. If you would invest  412.00  in Itau Unibanco Banco on January 21, 2024 and sell it today you would earn a total of  193.00  from holding Itau Unibanco Banco or generate 46.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.38%
Values	Daily Returns

Itau Unibanco Banco  vs.  Thai Union Group

Itau Unibanco Banco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itau Unibanco Banco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Itau Unibanco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thai Union Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Union Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Itau Unibanco and Thai Union

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

The idea behind Itau Unibanco Banco and Thai Union Group 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.