Correlation Between Ford and Shinsung Delta
Can any of the company-specific risk be diversified away by investing in both Ford and Shinsung Delta 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 Shinsung Delta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Shinsung Delta Tech, you can compare the effects of market volatilities on Ford and Shinsung Delta 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 Shinsung Delta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Shinsung Delta.
Diversification Opportunities for Ford and Shinsung Delta
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Shinsung is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Shinsung Delta Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsung Delta Tech 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 Shinsung Delta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsung Delta Tech has no effect on the direction of Ford i.e., Ford and Shinsung Delta go up and down completely randomly.
Pair Corralation between Ford and Shinsung Delta
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Shinsung Delta. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.18 times less risky than Shinsung Delta. The stock trades about 0.0 of its potential returns per unit of risk. The Shinsung Delta Tech is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 4,495,000 in Shinsung Delta Tech on August 29, 2024 and sell it today you would earn a total of 2,255,000 from holding Shinsung Delta Tech or generate 50.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Shinsung Delta Tech
Performance |
| Timeline |
| Ford Motor |
| Shinsung Delta Tech |
Ford and Shinsung Delta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Shinsung Delta
The main advantage of trading using opposite Ford and Shinsung Delta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Shinsung Delta 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 Shinsung Delta will offset losses from the drop in Shinsung Delta's long position.The idea behind Ford Motor and Shinsung Delta Tech 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.| Shinsung Delta vs. Inzi Display CoLtd | Shinsung Delta vs. Samick Musical Instruments | Shinsung Delta vs. Pyung Hwa Industrial | Shinsung Delta vs. Taeyang Metal Industrial |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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