Correlation Between Ford and ZTE Corp
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By analyzing existing cross correlation between Ford Motor and ZTE Corp, you can compare the effects of market volatilities on Ford and ZTE Corp 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 Ford with a short position of ZTE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ZTE Corp.
Diversification Opportunities for Ford and ZTE Corp
Weak diversification
The 3 months correlation between Ford and ZTE is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ZTE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTE Corp and Ford 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 Ford Motor are associated (or correlated) with ZTE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTE Corp has no effect on the direction of Ford i.e., Ford and ZTE Corp go up and down completely randomly.
Pair Corralation between Ford and ZTE Corp
Taking into account the 90-day investment horizon Ford is expected to generate 2.58 times less return on investment than ZTE Corp. But when comparing it to its historical volatility, Ford Motor is 1.21 times less risky than ZTE Corp. It trades about 0.01 of its potential returns per unit of risk. ZTE Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,471 in ZTE Corp on August 31, 2024 and sell it today you would earn a total of 645.00 from holding ZTE Corp or generate 26.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.82% |
| Values | Daily Returns |
Ford Motor vs. ZTE Corp
Performance |
| Timeline |
| Ford Motor |
| ZTE Corp |
Ford and ZTE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ZTE Corp
The main advantage of trading using opposite Ford and ZTE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ZTE Corp 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 ZTE Corp will offset losses from the drop in ZTE Corp's long position.The idea behind Ford Motor and ZTE Corp 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.| ZTE Corp vs. Kweichow Moutai Co | ZTE Corp vs. NAURA Technology Group | ZTE Corp vs. APT Medical | ZTE Corp vs. Contemporary Amperex Technology |
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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