Correlation Between Ford and HLB Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Ford and HLB Pharmaceutical 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 HLB Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and HLB Pharmaceutical Co, you can compare the effects of market volatilities on Ford and HLB Pharmaceutical 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 HLB Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and HLB Pharmaceutical.
Diversification Opportunities for Ford and HLB Pharmaceutical
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and HLB is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and HLB Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLB Pharmaceutical 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 HLB Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLB Pharmaceutical has no effect on the direction of Ford i.e., Ford and HLB Pharmaceutical go up and down completely randomly.
Pair Corralation between Ford and HLB Pharmaceutical
Taking into account the 90-day investment horizon Ford is expected to generate 1.67 times less return on investment than HLB Pharmaceutical. But when comparing it to its historical volatility, Ford Motor is 3.48 times less risky than HLB Pharmaceutical. It trades about 0.23 of its potential returns per unit of risk. HLB Pharmaceutical Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,954,000 in HLB Pharmaceutical Co on September 1, 2024 and sell it today you would earn a total of 271,000 from holding HLB Pharmaceutical Co or generate 13.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Ford Motor vs. HLB Pharmaceutical Co
Performance |
| Timeline |
| Ford Motor |
| HLB Pharmaceutical |
Ford and HLB Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and HLB Pharmaceutical
The main advantage of trading using opposite Ford and HLB Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, HLB Pharmaceutical 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 HLB Pharmaceutical will offset losses from the drop in HLB Pharmaceutical's long position.The idea behind Ford Motor and HLB Pharmaceutical 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.| HLB Pharmaceutical vs. Kolon Life Science | HLB Pharmaceutical vs. JETEMA Co | HLB Pharmaceutical vs. Aminologics CoLtd | HLB Pharmaceutical 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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