Correlation Between Ford and TBI Motion
Can any of the company-specific risk be diversified away by investing in both Ford and TBI Motion 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 TBI Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and TBI Motion Technology, you can compare the effects of market volatilities on Ford and TBI Motion 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 TBI Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and TBI Motion.
Diversification Opportunities for Ford and TBI Motion
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and TBI is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and TBI Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBI Motion 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 TBI Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBI Motion Technology has no effect on the direction of Ford i.e., Ford and TBI Motion go up and down completely randomly.
Pair Corralation between Ford and TBI Motion
Taking into account the 90-day investment horizon Ford is expected to generate 2.18 times less return on investment than TBI Motion. In addition to that, Ford is 1.03 times more volatile than TBI Motion Technology. It trades about 0.01 of its total potential returns per unit of risk. TBI Motion Technology is currently generating about 0.02 per unit of volatility. If you would invest 3,602 in TBI Motion Technology on September 3, 2024 and sell it today you would earn a total of 378.00 from holding TBI Motion Technology or generate 10.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.97% |
| Values | Daily Returns |
Ford Motor vs. TBI Motion Technology
Performance |
| Timeline |
| Ford Motor |
| TBI Motion Technology |
Ford and TBI Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and TBI Motion
The main advantage of trading using opposite Ford and TBI Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, TBI Motion 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 TBI Motion will offset losses from the drop in TBI Motion's long position.The idea behind Ford Motor and TBI Motion 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.| TBI Motion vs. Hiwin Technologies Corp | TBI Motion vs. Airtac International Group | TBI Motion vs. Taiwan Chelic Corp | TBI Motion vs. Kung Long Batteries |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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