Correlation Between Ford and Acuvi AB
Can any of the company-specific risk be diversified away by investing in both Ford and Acuvi AB 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 Acuvi AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Acuvi AB, you can compare the effects of market volatilities on Ford and Acuvi AB 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 Acuvi AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Acuvi AB.
Diversification Opportunities for Ford and Acuvi AB
Very good diversification
The 3 months correlation between Ford and Acuvi is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Acuvi AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acuvi 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 Acuvi AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acuvi AB has no effect on the direction of Ford i.e., Ford and Acuvi AB go up and down completely randomly.
Pair Corralation between Ford and Acuvi AB
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.66 times more return on investment than Acuvi AB. However, Ford Motor is 1.52 times less risky than Acuvi AB. It trades about 0.01 of its potential returns per unit of risk. Acuvi AB is currently generating about 0.0 per unit of risk. If you would invest 1,132 in Ford Motor on August 26, 2024 and sell it today you would lose (14.00) from holding Ford Motor or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ford Motor vs. Acuvi AB
Performance |
| Timeline |
| Ford Motor |
| Acuvi AB |
Ford and Acuvi AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Acuvi AB
The main advantage of trading using opposite Ford and Acuvi AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Acuvi AB 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 Acuvi AB will offset losses from the drop in Acuvi AB's long position.The idea behind Ford Motor and Acuvi 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.| Acuvi AB vs. Divio Technologies AB | Acuvi AB vs. XMReality AB | Acuvi AB vs. KABE Group AB | Acuvi AB vs. IAR Systems Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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