Correlation Between Ford and Hanwha ARIRANG
Can any of the company-specific risk be diversified away by investing in both Ford and Hanwha ARIRANG 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 ARIRANG 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 ARIRANG SP, you can compare the effects of market volatilities on Ford and Hanwha ARIRANG 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 ARIRANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hanwha ARIRANG.
Diversification Opportunities for Ford and Hanwha ARIRANG
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Hanwha is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hanwha ARIRANG SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha ARIRANG SP 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 ARIRANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha ARIRANG SP has no effect on the direction of Ford i.e., Ford and Hanwha ARIRANG go up and down completely randomly.
Pair Corralation between Ford and Hanwha ARIRANG
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Hanwha ARIRANG. In addition to that, Ford is 2.5 times more volatile than Hanwha ARIRANG SP. It trades about -0.02 of its total potential returns per unit of risk. Hanwha ARIRANG SP is currently generating about 0.14 per unit of volatility. If you would invest 1,326,517 in Hanwha ARIRANG SP on November 3, 2024 and sell it today you would earn a total of 429,483 from holding Hanwha ARIRANG SP or generate 32.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.16% |
| Values | Daily Returns |
Ford Motor vs. Hanwha ARIRANG SP
Performance |
| Timeline |
| Ford Motor |
| Hanwha ARIRANG SP |
Ford and Hanwha ARIRANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Hanwha ARIRANG
The main advantage of trading using opposite Ford and Hanwha ARIRANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Hanwha ARIRANG 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 ARIRANG will offset losses from the drop in Hanwha ARIRANG's long position.The idea behind Ford Motor and Hanwha ARIRANG SP 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 ARIRANG vs. 453950 | Hanwha ARIRANG vs. Busan Industrial Co | Hanwha ARIRANG vs. Busan Ind | Hanwha ARIRANG vs. Mirae Asset Daewoo |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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