Correlation Between Ford and Absolent Group
Can any of the company-specific risk be diversified away by investing in both Ford and Absolent Group 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 Absolent Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Absolent Group AB, you can compare the effects of market volatilities on Ford and Absolent Group 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 Absolent Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Absolent Group.
Diversification Opportunities for Ford and Absolent Group
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and Absolent is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Absolent Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolent Group AB 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 Absolent Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolent Group AB has no effect on the direction of Ford i.e., Ford and Absolent Group go up and down completely randomly.
Pair Corralation between Ford and Absolent Group
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.16 times more return on investment than Absolent Group. However, Ford is 1.16 times more volatile than Absolent Group AB. It trades about 0.01 of its potential returns per unit of risk. Absolent Group AB is currently generating about -0.05 per unit of risk. If you would invest 1,148 in Ford Motor on September 3, 2024 and sell it today you would lose (35.00) from holding Ford Motor or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Ford Motor vs. Absolent Group AB
Performance |
| Timeline |
| Ford Motor |
| Absolent Group AB |
Ford and Absolent Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Absolent Group
The main advantage of trading using opposite Ford and Absolent Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Absolent Group 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 Absolent Group will offset losses from the drop in Absolent Group's long position.The idea behind Ford Motor and Absolent Group AB 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.| Absolent Group vs. Beijer Ref AB | Absolent Group vs. Indutrade AB | Absolent Group vs. Addtech AB | Absolent Group vs. Nolato AB |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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