Correlation Between Ford and Accsys Technologies
Can any of the company-specific risk be diversified away by investing in both Ford and Accsys Technologies 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 Accsys Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Accsys Technologies PLC, you can compare the effects of market volatilities on Ford and Accsys Technologies 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 Accsys Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Accsys Technologies.
Diversification Opportunities for Ford and Accsys Technologies
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Accsys is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Accsys Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accsys Technologies PLC 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 Accsys Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accsys Technologies PLC has no effect on the direction of Ford i.e., Ford and Accsys Technologies go up and down completely randomly.
Pair Corralation between Ford and Accsys Technologies
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.52 times more return on investment than Accsys Technologies. However, Ford is 1.52 times more volatile than Accsys Technologies PLC. It trades about 0.03 of its potential returns per unit of risk. Accsys Technologies PLC is currently generating about -0.12 per unit of risk. If you would invest 1,096 in Ford Motor on August 25, 2024 and sell it today you would earn a total of 22.00 from holding Ford Motor or generate 2.01% 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. Accsys Technologies PLC
Performance |
| Timeline |
| Ford Motor |
| Accsys Technologies PLC |
Ford and Accsys Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Accsys Technologies
The main advantage of trading using opposite Ford and Accsys Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Accsys Technologies 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 Accsys Technologies will offset losses from the drop in Accsys Technologies' long position.The idea behind Ford Motor and Accsys Technologies PLC 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.| Accsys Technologies vs. Turning Point Brands | Accsys Technologies vs. Constellation Brands Class | Accsys Technologies vs. Allegheny Technologies Incorporated | Accsys Technologies vs. Japan Tobacco ADR |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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