Correlation Between Ford and Penghua Shenzhen
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By analyzing existing cross correlation between Ford Motor and Penghua Shenzhen Energy, you can compare the effects of market volatilities on Ford and Penghua Shenzhen 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 Penghua Shenzhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Penghua Shenzhen.
Diversification Opportunities for Ford and Penghua Shenzhen
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Penghua is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Penghua Shenzhen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penghua Shenzhen Energy 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 Penghua Shenzhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penghua Shenzhen Energy has no effect on the direction of Ford i.e., Ford and Penghua Shenzhen go up and down completely randomly.
Pair Corralation between Ford and Penghua Shenzhen
Taking into account the 90-day investment horizon Ford is expected to generate 1.03 times less return on investment than Penghua Shenzhen. In addition to that, Ford is 2.67 times more volatile than Penghua Shenzhen Energy. It trades about 0.03 of its total potential returns per unit of risk. Penghua Shenzhen Energy is currently generating about 0.08 per unit of volatility. If you would invest 511.00 in Penghua Shenzhen Energy on August 29, 2024 and sell it today you would earn a total of 90.00 from holding Penghua Shenzhen Energy or generate 17.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.58% |
| Values | Daily Returns |
Ford Motor vs. Penghua Shenzhen Energy
Performance |
| Timeline |
| Ford Motor |
| Penghua Shenzhen Energy |
Ford and Penghua Shenzhen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Penghua Shenzhen
The main advantage of trading using opposite Ford and Penghua Shenzhen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Penghua Shenzhen 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 Penghua Shenzhen will offset losses from the drop in Penghua Shenzhen's long position.The idea behind Ford Motor and Penghua Shenzhen Energy 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.| Penghua Shenzhen vs. Zhongtong Guomai Communication | Penghua Shenzhen vs. Bus Online Co | Penghua Shenzhen vs. Guangzhou Dongfang Hotel | Penghua Shenzhen vs. Eastern Communications Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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