Correlation Between Ford and Peijia Medical
Can any of the company-specific risk be diversified away by investing in both Ford and Peijia Medical 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 Peijia Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Peijia Medical Limited, you can compare the effects of market volatilities on Ford and Peijia Medical 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 Peijia Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Peijia Medical.
Diversification Opportunities for Ford and Peijia Medical
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Peijia is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Peijia Medical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peijia Medical 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 Peijia Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peijia Medical has no effect on the direction of Ford i.e., Ford and Peijia Medical go up and down completely randomly.
Pair Corralation between Ford and Peijia Medical
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Peijia Medical. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.61 times less risky than Peijia Medical. The stock trades about -0.25 of its potential returns per unit of risk. The Peijia Medical Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 46.00 in Peijia Medical Limited on October 11, 2024 and sell it today you would earn a total of 1.00 from holding Peijia Medical Limited or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Ford Motor vs. Peijia Medical Limited
Performance |
| Timeline |
| Ford Motor |
| Peijia Medical |
Ford and Peijia Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Peijia Medical
The main advantage of trading using opposite Ford and Peijia Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Peijia Medical 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 Peijia Medical will offset losses from the drop in Peijia Medical's long position.The idea behind Ford Motor and Peijia Medical Limited 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.| Peijia Medical vs. Hitachi Construction Machinery | Peijia Medical vs. AGRICULTBK HADR25 YC | Peijia Medical vs. ecotel communication ag | Peijia Medical vs. North American Construction |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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