Correlation Between Ford and Sino Horizon
Can any of the company-specific risk be diversified away by investing in both Ford and Sino Horizon 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 Sino Horizon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Sino Horizon Holdings, you can compare the effects of market volatilities on Ford and Sino Horizon 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 Sino Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Sino Horizon.
Diversification Opportunities for Ford and Sino Horizon
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Sino is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sino Horizon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Horizon Holdings 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 Sino Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Horizon Holdings has no effect on the direction of Ford i.e., Ford and Sino Horizon go up and down completely randomly.
Pair Corralation between Ford and Sino Horizon
Taking into account the 90-day investment horizon Ford is expected to generate 13.02 times less return on investment than Sino Horizon. But when comparing it to its historical volatility, Ford Motor is 1.38 times less risky than Sino Horizon. It trades about 0.0 of its potential returns per unit of risk. Sino Horizon Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,215 in Sino Horizon Holdings on October 25, 2024 and sell it today you would earn a total of 225.00 from holding Sino Horizon Holdings or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.58% |
| Values | Daily Returns |
Ford Motor vs. Sino Horizon Holdings
Performance |
| Timeline |
| Ford Motor |
| Sino Horizon Holdings |
Ford and Sino Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Sino Horizon
The main advantage of trading using opposite Ford and Sino Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Sino Horizon 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 Sino Horizon will offset losses from the drop in Sino Horizon's long position.The idea behind Ford Motor and Sino Horizon Holdings 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.| Sino Horizon vs. Kee Tai Properties | Sino Horizon vs. Hung Sheng Construction | Sino Horizon vs. BES Engineering Co | Sino Horizon vs. Chainqui Construction Development |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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