Correlation Between Ford and Hanwha Life
Can any of the company-specific risk be diversified away by investing in both Ford and Hanwha Life 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 Hanwha Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Hanwha Life Insurance, you can compare the effects of market volatilities on Ford and Hanwha Life 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 Hanwha Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hanwha Life.
Diversification Opportunities for Ford and Hanwha Life
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Hanwha is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hanwha Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Life Insurance 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 Hanwha Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Life Insurance has no effect on the direction of Ford i.e., Ford and Hanwha Life go up and down completely randomly.
Pair Corralation between Ford and Hanwha Life
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Hanwha Life. In addition to that, Ford is 1.16 times more volatile than Hanwha Life Insurance. It trades about -0.03 of its total potential returns per unit of risk. Hanwha Life Insurance is currently generating about 0.0 per unit of volatility. If you would invest 265,000 in Hanwha Life Insurance on October 12, 2024 and sell it today you would lose (13,500) from holding Hanwha Life Insurance or give up 5.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.26% |
| Values | Daily Returns |
Ford Motor vs. Hanwha Life Insurance
Performance |
| Timeline |
| Ford Motor |
| Hanwha Life Insurance |
Ford and Hanwha Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Hanwha Life
The main advantage of trading using opposite Ford and Hanwha Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Hanwha Life 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 Hanwha Life will offset losses from the drop in Hanwha Life's long position.The idea behind Ford Motor and Hanwha Life Insurance 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.| Hanwha Life vs. Sungdo Engineering Construction | Hanwha Life vs. Seoam Machinery Industry | Hanwha Life vs. Genie Music | Hanwha Life vs. Dongwoo Farm To |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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