Correlation Between Ford and TOPBI International
Can any of the company-specific risk be diversified away by investing in both Ford and TOPBI International 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 TOPBI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and TOPBI International Holdings, you can compare the effects of market volatilities on Ford and TOPBI International 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 TOPBI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and TOPBI International.
Diversification Opportunities for Ford and TOPBI International
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and TOPBI is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and TOPBI International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPBI International 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 TOPBI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPBI International has no effect on the direction of Ford i.e., Ford and TOPBI International go up and down completely randomly.
Pair Corralation between Ford and TOPBI International
Taking into account the 90-day investment horizon Ford is expected to generate 2.14 times less return on investment than TOPBI International. But when comparing it to its historical volatility, Ford Motor is 1.67 times less risky than TOPBI International. It trades about 0.17 of its potential returns per unit of risk. TOPBI International Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,170 in TOPBI International Holdings on August 31, 2024 and sell it today you would earn a total of 200.00 from holding TOPBI International Holdings or generate 17.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ford Motor vs. TOPBI International Holdings
Performance |
| Timeline |
| Ford Motor |
| TOPBI International |
Ford and TOPBI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and TOPBI International
The main advantage of trading using opposite Ford and TOPBI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, TOPBI International 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 TOPBI International will offset losses from the drop in TOPBI International's long position.The idea behind Ford Motor and TOPBI International 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.| TOPBI International vs. Ruentex Industries | TOPBI International vs. Grand Pacific Petrochemical | TOPBI International vs. Formosa International Hotels | TOPBI International vs. Jinli Group Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |