Correlation Between Ford and Avalue Technology
Can any of the company-specific risk be diversified away by investing in both Ford and Avalue Technology 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 Avalue Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Avalue Technology, you can compare the effects of market volatilities on Ford and Avalue Technology 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 Avalue Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Avalue Technology.
Diversification Opportunities for Ford and Avalue Technology
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Avalue is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Avalue Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalue Technology 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 Avalue Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalue Technology has no effect on the direction of Ford i.e., Ford and Avalue Technology go up and down completely randomly.
Pair Corralation between Ford and Avalue Technology
Taking into account the 90-day investment horizon Ford is expected to generate 5.07 times less return on investment than Avalue Technology. But when comparing it to its historical volatility, Ford Motor is 1.11 times less risky than Avalue Technology. It trades about 0.01 of its potential returns per unit of risk. Avalue Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,989 in Avalue Technology on August 29, 2024 and sell it today you would earn a total of 3,951 from holding Avalue Technology or generate 65.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.77% |
| Values | Daily Returns |
Ford Motor vs. Avalue Technology
Performance |
| Timeline |
| Ford Motor |
| Avalue Technology |
Ford and Avalue Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Avalue Technology
The main advantage of trading using opposite Ford and Avalue Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Avalue Technology 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 Avalue Technology will offset losses from the drop in Avalue Technology's long position.The idea behind Ford Motor and Avalue Technology 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.| Avalue Technology vs. Qisda Corp | Avalue Technology vs. Quanta Computer | Avalue Technology vs. Coretronic | Avalue Technology vs. Wistron Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Stocks Directory Find actively traded stocks across global markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |