Correlation Between Ford and Banpu Public
Can any of the company-specific risk be diversified away by investing in both Ford and Banpu Public 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 Banpu Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Banpu Public, you can compare the effects of market volatilities on Ford and Banpu Public 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 Banpu Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Banpu Public.
Diversification Opportunities for Ford and Banpu Public
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Banpu is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Banpu Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banpu Public 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 Banpu Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banpu Public has no effect on the direction of Ford i.e., Ford and Banpu Public go up and down completely randomly.
Pair Corralation between Ford and Banpu Public
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.01 times more return on investment than Banpu Public. However, Ford is 1.01 times more volatile than Banpu Public. It trades about 0.04 of its potential returns per unit of risk. Banpu Public is currently generating about -0.11 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Banpu Public
Performance |
| Timeline |
| Ford Motor |
| Banpu Public |
Ford and Banpu Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Banpu Public
The main advantage of trading using opposite Ford and Banpu Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Banpu Public 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 Banpu Public will offset losses from the drop in Banpu Public's long position.The idea behind Ford Motor and Banpu Public 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.| Banpu Public vs. PTT Public | Banpu Public vs. PTT Exploration and | Banpu Public vs. Bangkok Bank Public | Banpu Public vs. Thai Oil Public |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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