Correlation Between Ford and Sam A
Can any of the company-specific risk be diversified away by investing in both Ford and Sam A at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and Sam A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Sam A Pharm Co, you can compare the effects of market volatilities on Ford and Sam A 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 Sam A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Sam A.
Diversification Opportunities for Ford and Sam A
Very good diversification
The 3 months correlation between Ford and Sam is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sam A Pharm Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam A Pharm 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 Sam A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam A Pharm has no effect on the direction of Ford i.e., Ford and Sam A go up and down completely randomly.
Pair Corralation between Ford and Sam A
Taking into account the 90-day investment horizon Ford is expected to generate 1.47 times less return on investment than Sam A. But when comparing it to its historical volatility, Ford Motor is 1.24 times less risky than Sam A. It trades about 0.01 of its potential returns per unit of risk. Sam A Pharm Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,639,567 in Sam A Pharm Co on August 31, 2024 and sell it today you would earn a total of 91,433 from holding Sam A Pharm Co or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.07% |
| Values | Daily Returns |
Ford Motor vs. Sam A Pharm Co
Performance |
| Timeline |
| Ford Motor |
| Sam A Pharm |
Ford and Sam A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Sam A
The main advantage of trading using opposite Ford and Sam A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Sam A 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 Sam A will offset losses from the drop in Sam A's long position.The idea behind Ford Motor and Sam A Pharm Co 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.| Sam A vs. Kolon Life Science | Sam A vs. JETEMA Co | Sam A vs. Aminologics CoLtd | Sam A vs. Daihan Pharmaceutical CoLtd |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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