Correlation Between Visa and Bangkok Expressway

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

Diversification Opportunities for Visa and Bangkok Expressway

-0.81

Correlation Coefficient

Visa  Bangkok Expressway

Pay attention - limited upside

The 3 months correlation between Visa and Bangkok is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bangkok Expressway and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Expressway and 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 Bangkok Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Expressway and has no effect on the direction of Visa i.e., Visa and Bangkok Expressway go up and down completely randomly.

Pair Corralation between Visa and Bangkok Expressway

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.57 times more return on investment than Bangkok Expressway. However, Visa Class A is 1.77 times less risky than Bangkok Expressway. It trades about 0.25 of its potential returns per unit of risk. Bangkok Expressway and is currently generating about -0.14 per unit of risk. If you would invest  31,612  in Visa Class A on December 1, 2024 and sell it today you would earn a total of  4,659  from holding Visa Class A or generate 14.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Bangkok Expressway and

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Bangkok Expressway and

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bangkok Expressway and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Visa and Bangkok Expressway

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

The idea behind Visa Class A and Bangkok Expressway and 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.

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