Correlation Between Visa and Thai Union

Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Thai Union 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 Union Group, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Thai Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Thai Union.

Diversification Opportunities for Visa and Thai Union

-0.1

Correlation Coefficient

Visa  Thai Union

Good diversification

The 3 months correlation between Visa and Thai is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 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 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 Visa i.e., Visa and Thai Union go up and down completely randomly.

Pair Corralation between Visa and Thai Union

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Thai Union. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.87 times less risky than Thai Union. The stock trades about -0.13 of its potential returns per unit of risk. The Thai Union Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,460  in Thai Union Group on February 4, 2024 and sell it today you would earn a total of  30.00  from holding Thai Union Group or generate 2.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.27%
Values	Daily Returns

Visa Class A  vs.  Thai Union Group

Visa Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visa Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated 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 quite persistent fundamental drivers, Thai Union is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Visa and Thai Union

The main advantage of trading using opposite Visa and Thai Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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 Visa Class A 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.