Correlation Between Ford and LEENO Industrial
Can any of the company-specific risk be diversified away by investing in both Ford and LEENO Industrial 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 LEENO Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and LEENO Industrial, you can compare the effects of market volatilities on Ford and LEENO Industrial 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 LEENO Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and LEENO Industrial.
Diversification Opportunities for Ford and LEENO Industrial
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and LEENO is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and LEENO Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEENO Industrial 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 LEENO Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEENO Industrial has no effect on the direction of Ford i.e., Ford and LEENO Industrial go up and down completely randomly.
Pair Corralation between Ford and LEENO Industrial
Taking into account the 90-day investment horizon Ford is expected to generate 35.18 times less return on investment than LEENO Industrial. But when comparing it to its historical volatility, Ford Motor is 1.89 times less risky than LEENO Industrial. It trades about 0.01 of its potential returns per unit of risk. LEENO Industrial is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 19,692,100 in LEENO Industrial on October 25, 2024 and sell it today you would earn a total of 2,257,900 from holding LEENO Industrial or generate 11.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. LEENO Industrial
Performance |
| Timeline |
| Ford Motor |
| LEENO Industrial |
Ford and LEENO Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and LEENO Industrial
The main advantage of trading using opposite Ford and LEENO Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, LEENO Industrial 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 LEENO Industrial will offset losses from the drop in LEENO Industrial's long position.The idea behind Ford Motor and LEENO Industrial 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.| LEENO Industrial vs. Tokai Carbon Korea | LEENO Industrial vs. LF Co | LEENO Industrial vs. Koh Young Technology |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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