Correlation Between Ford and Linzhou Heavy
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By analyzing existing cross correlation between Ford Motor and Linzhou Heavy Machinery, you can compare the effects of market volatilities on Ford and Linzhou Heavy 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 Linzhou Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Linzhou Heavy.
Diversification Opportunities for Ford and Linzhou Heavy
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Linzhou is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Linzhou Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linzhou Heavy Machinery 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 Linzhou Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linzhou Heavy Machinery has no effect on the direction of Ford i.e., Ford and Linzhou Heavy go up and down completely randomly.
Pair Corralation between Ford and Linzhou Heavy
Taking into account the 90-day investment horizon Ford is expected to generate 10.95 times less return on investment than Linzhou Heavy. But when comparing it to its historical volatility, Ford Motor is 1.5 times less risky than Linzhou Heavy. It trades about 0.01 of its potential returns per unit of risk. Linzhou Heavy Machinery is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 253.00 in Linzhou Heavy Machinery on September 4, 2024 and sell it today you would earn a total of 199.00 from holding Linzhou Heavy Machinery or generate 78.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.16% |
| Values | Daily Returns |
Ford Motor vs. Linzhou Heavy Machinery
Performance |
| Timeline |
| Ford Motor |
| Linzhou Heavy Machinery |
Ford and Linzhou Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Linzhou Heavy
The main advantage of trading using opposite Ford and Linzhou Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Linzhou Heavy 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 Linzhou Heavy will offset losses from the drop in Linzhou Heavy's long position.The idea behind Ford Motor and Linzhou Heavy Machinery 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.| Linzhou Heavy vs. Chengdu Kanghua Biological | Linzhou Heavy vs. Beijing Wantai Biological | Linzhou Heavy vs. Suzhou Novoprotein Scientific | Linzhou Heavy vs. Aluminum Corp of |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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