Correlation Between Ford and Nanxing Furniture
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By analyzing existing cross correlation between Ford Motor and Nanxing Furniture Machinery, you can compare the effects of market volatilities on Ford and Nanxing Furniture 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 Nanxing Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Nanxing Furniture.
Diversification Opportunities for Ford and Nanxing Furniture
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Nanxing is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Nanxing Furniture Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanxing Furniture 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 Nanxing Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanxing Furniture has no effect on the direction of Ford i.e., Ford and Nanxing Furniture go up and down completely randomly.
Pair Corralation between Ford and Nanxing Furniture
Taking into account the 90-day investment horizon Ford is expected to generate 3.35 times less return on investment than Nanxing Furniture. But when comparing it to its historical volatility, Ford Motor is 1.37 times less risky than Nanxing Furniture. It trades about 0.02 of its potential returns per unit of risk. Nanxing Furniture Machinery is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,053 in Nanxing Furniture Machinery on August 28, 2024 and sell it today you would earn a total of 532.00 from holding Nanxing Furniture Machinery or generate 50.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.8% |
| Values | Daily Returns |
Ford Motor vs. Nanxing Furniture Machinery
Performance |
| Timeline |
| Ford Motor |
| Nanxing Furniture |
Ford and Nanxing Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Nanxing Furniture
The main advantage of trading using opposite Ford and Nanxing Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Nanxing Furniture 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 Nanxing Furniture will offset losses from the drop in Nanxing Furniture's long position.The idea behind Ford Motor and Nanxing Furniture 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.| Nanxing Furniture vs. Dhc Software Co | Nanxing Furniture vs. Vanfund Urban Investment | Nanxing Furniture vs. China National Software | Nanxing Furniture vs. Chengdu Xingrong 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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