Correlation Between Ford and Asm Pacific
Can any of the company-specific risk be diversified away by investing in both Ford and Asm Pacific 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 Asm Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Asm Pacific Technology, you can compare the effects of market volatilities on Ford and Asm Pacific 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 Asm Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Asm Pacific.
Diversification Opportunities for Ford and Asm Pacific
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Asm is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Asm Pacific Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asm Pacific Technology 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 Asm Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asm Pacific Technology has no effect on the direction of Ford i.e., Ford and Asm Pacific go up and down completely randomly.
Pair Corralation between Ford and Asm Pacific
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.32 times more return on investment than Asm Pacific. However, Ford is 1.32 times more volatile than Asm Pacific Technology. It trades about 0.04 of its potential returns per unit of risk. Asm Pacific Technology is currently generating about -0.49 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. Asm Pacific Technology
Performance |
| Timeline |
| Ford Motor |
| Asm Pacific Technology |
Ford and Asm Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Asm Pacific
The main advantage of trading using opposite Ford and Asm Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Asm Pacific 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 Asm Pacific will offset losses from the drop in Asm Pacific's long position.The idea behind Ford Motor and Asm Pacific Technology 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.| Asm Pacific vs. Disco Corp ADR | Asm Pacific vs. Tokyo Electron | Asm Pacific vs. Lasertec | Asm Pacific vs. Sumco Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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