Correlation Between Ford and Jilin Chemical
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By analyzing existing cross correlation between Ford Motor and Jilin Chemical Fibre, you can compare the effects of market volatilities on Ford and Jilin Chemical 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 Jilin Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Jilin Chemical.
Diversification Opportunities for Ford and Jilin Chemical
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Jilin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Jilin Chemical Fibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jilin Chemical Fibre 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 Jilin Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jilin Chemical Fibre has no effect on the direction of Ford i.e., Ford and Jilin Chemical go up and down completely randomly.
Pair Corralation between Ford and Jilin Chemical
Taking into account the 90-day investment horizon Ford is expected to generate 2.09 times less return on investment than Jilin Chemical. But when comparing it to its historical volatility, Ford Motor is 1.09 times less risky than Jilin Chemical. It trades about 0.01 of its potential returns per unit of risk. Jilin Chemical Fibre is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 368.00 in Jilin Chemical Fibre on August 28, 2024 and sell it today you would earn a total of 13.00 from holding Jilin Chemical Fibre or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.03% |
| Values | Daily Returns |
Ford Motor vs. Jilin Chemical Fibre
Performance |
| Timeline |
| Ford Motor |
| Jilin Chemical Fibre |
Ford and Jilin Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Jilin Chemical
The main advantage of trading using opposite Ford and Jilin Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Jilin Chemical 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 Jilin Chemical will offset losses from the drop in Jilin Chemical's long position.The idea behind Ford Motor and Jilin Chemical Fibre 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.| Jilin Chemical vs. Zijin Mining Group | Jilin Chemical vs. Wanhua Chemical Group | Jilin Chemical vs. Baoshan Iron Steel | Jilin Chemical vs. Shandong Gold Mining |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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