Correlation Between Ford and Guangdong Tianhe
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By analyzing existing cross correlation between Ford Motor and Guangdong Tianhe Agricultural, you can compare the effects of market volatilities on Ford and Guangdong Tianhe 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 Guangdong Tianhe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Guangdong Tianhe.
Diversification Opportunities for Ford and Guangdong Tianhe
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Guangdong is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Guangdong Tianhe Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Tianhe Agr 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 Guangdong Tianhe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Tianhe Agr has no effect on the direction of Ford i.e., Ford and Guangdong Tianhe go up and down completely randomly.
Pair Corralation between Ford and Guangdong Tianhe
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.52 times more return on investment than Guangdong Tianhe. However, Ford Motor is 1.91 times less risky than Guangdong Tianhe. It trades about -0.25 of its potential returns per unit of risk. Guangdong Tianhe Agricultural is currently generating about -0.34 per unit of risk. If you would invest 1,039 in Ford Motor on October 14, 2024 and sell it today you would lose (74.00) from holding Ford Motor or give up 7.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Ford Motor vs. Guangdong Tianhe Agricultural
Performance |
| Timeline |
| Ford Motor |
| Guangdong Tianhe Agr |
Ford and Guangdong Tianhe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Guangdong Tianhe
The main advantage of trading using opposite Ford and Guangdong Tianhe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Guangdong Tianhe 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 Guangdong Tianhe will offset losses from the drop in Guangdong Tianhe's long position.The idea behind Ford Motor and Guangdong Tianhe Agricultural 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.| Guangdong Tianhe vs. Penyao Environmental Protection | Guangdong Tianhe vs. GreenTech Environmental Co | Guangdong Tianhe vs. Zoy Home Furnishing | Guangdong Tianhe vs. Fujian Nanwang Environment |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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