Correlation Between Ford and Beijing Lanxum
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By analyzing existing cross correlation between Ford Motor and Beijing Lanxum Tech, you can compare the effects of market volatilities on Ford and Beijing Lanxum 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 Beijing Lanxum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Beijing Lanxum.
Diversification Opportunities for Ford and Beijing Lanxum
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Beijing is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Beijing Lanxum Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Lanxum Tech 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 Beijing Lanxum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Lanxum Tech has no effect on the direction of Ford i.e., Ford and Beijing Lanxum go up and down completely randomly.
Pair Corralation between Ford and Beijing Lanxum
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Beijing Lanxum. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.66 times less risky than Beijing Lanxum. The stock trades about -0.02 of its potential returns per unit of risk. The Beijing Lanxum Tech is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 173.00 in Beijing Lanxum Tech on November 3, 2024 and sell it today you would earn a total of 605.00 from holding Beijing Lanxum Tech or generate 349.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.35% |
| Values | Daily Returns |
Ford Motor vs. Beijing Lanxum Tech
Performance |
| Timeline |
| Ford Motor |
| Beijing Lanxum Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Beijing Lanxum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Beijing Lanxum
The main advantage of trading using opposite Ford and Beijing Lanxum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Beijing Lanxum 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 Beijing Lanxum will offset losses from the drop in Beijing Lanxum's long position.The idea behind Ford Motor and Beijing Lanxum Tech 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.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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