Correlation Between Ford and Tjk Machinery
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By analyzing existing cross correlation between Ford Motor and Tjk Machinery Tianjin, you can compare the effects of market volatilities on Ford and Tjk Machinery 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 Tjk Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Tjk Machinery.
Diversification Opportunities for Ford and Tjk Machinery
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Tjk is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Tjk Machinery Tianjin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tjk Machinery Tianjin 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 Tjk Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tjk Machinery Tianjin has no effect on the direction of Ford i.e., Ford and Tjk Machinery go up and down completely randomly.
Pair Corralation between Ford and Tjk Machinery
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Tjk Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.65 times less risky than Tjk Machinery. The stock trades about 0.0 of its potential returns per unit of risk. The Tjk Machinery Tianjin is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,194 in Tjk Machinery Tianjin on November 9, 2024 and sell it today you would earn a total of 187.00 from holding Tjk Machinery Tianjin or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.35% |
| Values | Daily Returns |
Ford Motor vs. Tjk Machinery Tianjin
Performance |
| Timeline |
| Ford Motor |
| Tjk Machinery Tianjin |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Ford and Tjk Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Tjk Machinery
The main advantage of trading using opposite Ford and Tjk Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Tjk Machinery 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 Tjk Machinery will offset losses from the drop in Tjk Machinery's long position.The idea behind Ford Motor and Tjk Machinery Tianjin 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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