Correlation Between Ford and Aeon Credit
Can any of the company-specific risk be diversified away by investing in both Ford and Aeon Credit 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 Aeon Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Aeon Credit Service, you can compare the effects of market volatilities on Ford and Aeon Credit 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 Aeon Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Aeon Credit.
Diversification Opportunities for Ford and Aeon Credit
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Aeon is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Aeon Credit Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Credit Service 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 Aeon Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon Credit Service has no effect on the direction of Ford i.e., Ford and Aeon Credit go up and down completely randomly.
Pair Corralation between Ford and Aeon Credit
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.98 times more return on investment than Aeon Credit. However, Ford is 1.98 times more volatile than Aeon Credit Service. It trades about 0.05 of its potential returns per unit of risk. Aeon Credit Service is currently generating about -0.07 per unit of risk. If you would invest 1,089 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 51.00 from holding Ford Motor or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Ford Motor vs. Aeon Credit Service
Performance |
| Timeline |
| Ford Motor |
| Aeon Credit Service |
Ford and Aeon Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Aeon Credit
The main advantage of trading using opposite Ford and Aeon Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Aeon Credit 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 Aeon Credit will offset losses from the drop in Aeon Credit's long position.The idea behind Ford Motor and Aeon Credit Service 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.| Aeon Credit vs. Press Metal Bhd | Aeon Credit vs. Malayan Banking Bhd | Aeon Credit vs. Cengild Medical Berhad | Aeon Credit vs. Public Bank Bhd |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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