Correlation Between Ford and Hubei Geoway

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ford and Hubei Geoway 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 Hubei Geoway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Hubei Geoway Investment, you can compare the effects of market volatilities on Ford and Hubei Geoway 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 Hubei Geoway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hubei Geoway.

Diversification Opportunities for Ford and Hubei Geoway

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Ford and Hubei is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hubei Geoway Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Geoway Investment 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 Hubei Geoway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Geoway Investment has no effect on the direction of Ford i.e., Ford and Hubei Geoway go up and down completely randomly.

Pair Corralation between Ford and Hubei Geoway

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.88 times more return on investment than Hubei Geoway. However, Ford Motor is 1.14 times less risky than Hubei Geoway. It trades about 0.01 of its potential returns per unit of risk. Hubei Geoway Investment is currently generating about -0.01 per unit of risk. If you would invest  1,110  in Ford Motor on August 29, 2024 and sell it today you would earn a total of  0.00  from holding Ford Motor or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy96.17%
ValuesDaily Returns

Ford Motor  vs.  Hubei Geoway Investment

 Performance 
       Timeline  
Ford Motor 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
Hubei Geoway Investment 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Geoway Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hubei Geoway may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Ford and Hubei Geoway Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ford and Hubei Geoway

The main advantage of trading using opposite Ford and Hubei Geoway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Hubei Geoway 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 Hubei Geoway will offset losses from the drop in Hubei Geoway's long position.
The idea behind Ford Motor and Hubei Geoway Investment 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.
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

Other Complementary Tools

Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators