Correlation Between Ford and Liuzhou Chemical
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By analyzing existing cross correlation between Ford Motor and Liuzhou Chemical Industry, you can compare the effects of market volatilities on Ford and Liuzhou Chemical 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 Liuzhou Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Liuzhou Chemical.
Diversification Opportunities for Ford and Liuzhou Chemical
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Liuzhou is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Liuzhou Chemical Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liuzhou Chemical Industry 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 Liuzhou Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liuzhou Chemical Industry has no effect on the direction of Ford i.e., Ford and Liuzhou Chemical go up and down completely randomly.
Pair Corralation between Ford and Liuzhou Chemical
Taking into account the 90-day investment horizon Ford is expected to generate 3.48 times less return on investment than Liuzhou Chemical. But when comparing it to its historical volatility, Ford Motor is 1.29 times less risky than Liuzhou Chemical. It trades about 0.0 of its potential returns per unit of risk. Liuzhou Chemical Industry is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 316.00 in Liuzhou Chemical Industry on January 17, 2025 and sell it today you would lose (15.00) from holding Liuzhou Chemical Industry or give up 4.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.96% |
| Values | Daily Returns |
Ford Motor vs. Liuzhou Chemical Industry
Performance |
| Timeline |
| Ford Motor |
| Liuzhou Chemical Industry |
Ford and Liuzhou Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Liuzhou Chemical
The main advantage of trading using opposite Ford and Liuzhou Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Liuzhou Chemical 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 Liuzhou Chemical will offset losses from the drop in Liuzhou Chemical's long position.The idea behind Ford Motor and Liuzhou Chemical Industry 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.| Liuzhou Chemical vs. Zijin Mining Group | Liuzhou Chemical vs. Wanhua Chemical Group | Liuzhou Chemical vs. Baoshan Iron Steel | Liuzhou Chemical vs. Shandong Gold Mining |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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