Correlation Between Ford and China Molybdenum
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By analyzing existing cross correlation between Ford Motor and China Molybdenum Co, you can compare the effects of market volatilities on Ford and China Molybdenum 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 China Molybdenum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and China Molybdenum.
Diversification Opportunities for Ford and China Molybdenum
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and China is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and China Molybdenum Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Molybdenum 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 China Molybdenum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Molybdenum has no effect on the direction of Ford i.e., Ford and China Molybdenum go up and down completely randomly.
Pair Corralation between Ford and China Molybdenum
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.32 times more return on investment than China Molybdenum. However, Ford is 1.32 times more volatile than China Molybdenum Co. It trades about 0.04 of its potential returns per unit of risk. China Molybdenum Co is currently generating about -0.19 per unit of risk. If you would invest 1,122 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Ford Motor or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. China Molybdenum Co
Performance |
| Timeline |
| Ford Motor |
| China Molybdenum |
Ford and China Molybdenum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and China Molybdenum
The main advantage of trading using opposite Ford and China Molybdenum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, China Molybdenum 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 China Molybdenum will offset losses from the drop in China Molybdenum's long position.The idea behind Ford Motor and China Molybdenum Co 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.| China Molybdenum vs. Anhui Jianghuai Automobile | China Molybdenum vs. Jinhui Liquor Co | China Molybdenum vs. China Publishing Media | China Molybdenum vs. Changchun Faway Automobile |
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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