Correlation Between Ford and Pyung Hwa
Can any of the company-specific risk be diversified away by investing in both Ford and Pyung Hwa 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 Pyung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Pyung Hwa Industrial, you can compare the effects of market volatilities on Ford and Pyung Hwa 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 Pyung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pyung Hwa.
Diversification Opportunities for Ford and Pyung Hwa
Excellent diversification
The 3 months correlation between Ford and Pyung is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pyung Hwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyung Hwa 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 Pyung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyung Hwa Industrial has no effect on the direction of Ford i.e., Ford and Pyung Hwa go up and down completely randomly.
Pair Corralation between Ford and Pyung Hwa
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Pyung Hwa. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 3.31 times less risky than Pyung Hwa. The stock trades about -0.06 of its potential returns per unit of risk. The Pyung Hwa Industrial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 127,700 in Pyung Hwa Industrial on November 29, 2024 and sell it today you would lose (300.00) from holding Pyung Hwa Industrial or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Ford Motor vs. Pyung Hwa Industrial
Performance |
| Timeline |
| Ford Motor |
| Pyung Hwa Industrial |
Ford and Pyung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pyung Hwa
The main advantage of trading using opposite Ford and Pyung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pyung Hwa 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 Pyung Hwa will offset losses from the drop in Pyung Hwa's long position.The idea behind Ford Motor and Pyung Hwa 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.| Pyung Hwa vs. Namyang Dairy | Pyung Hwa vs. Kyeryong Construction Industrial | Pyung Hwa vs. Tuksu Engineering ConstructionLtd | Pyung Hwa vs. CKH Food Health |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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