Correlation Between Ford and Shanghai Laimu
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By analyzing existing cross correlation between Ford Motor and Shanghai Laimu Electronics, you can compare the effects of market volatilities on Ford and Shanghai Laimu 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 Shanghai Laimu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Shanghai Laimu.
Diversification Opportunities for Ford and Shanghai Laimu
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Shanghai is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Shanghai Laimu Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Laimu Elect 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 Shanghai Laimu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Laimu Elect has no effect on the direction of Ford i.e., Ford and Shanghai Laimu go up and down completely randomly.
Pair Corralation between Ford and Shanghai Laimu
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Shanghai Laimu. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.25 times less risky than Shanghai Laimu. The stock trades about -0.01 of its potential returns per unit of risk. The Shanghai Laimu Electronics is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 885.00 in Shanghai Laimu Electronics on September 12, 2024 and sell it today you would lose (61.00) from holding Shanghai Laimu Electronics or give up 6.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.6% |
| Values | Daily Returns |
Ford Motor vs. Shanghai Laimu Electronics
Performance |
| Timeline |
| Ford Motor |
| Shanghai Laimu Elect |
Ford and Shanghai Laimu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Shanghai Laimu
The main advantage of trading using opposite Ford and Shanghai Laimu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Shanghai Laimu 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 Shanghai Laimu will offset losses from the drop in Shanghai Laimu's long position.The idea behind Ford Motor and Shanghai Laimu Electronics 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.| Shanghai Laimu vs. Shandong Iron and | Shanghai Laimu vs. Yunnan Jianzhijia Health Chain | Shanghai Laimu vs. Sanbo Hospital Management | Shanghai Laimu vs. Sinosteel Engineering and |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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