Correlation Between Ford and Biotron
Can any of the company-specific risk be diversified away by investing in both Ford and Biotron 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 Biotron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Biotron Limited, you can compare the effects of market volatilities on Ford and Biotron 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 Biotron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Biotron.
Diversification Opportunities for Ford and Biotron
Average diversification
The 3 months correlation between Ford and Biotron is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Biotron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotron Limited 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 Biotron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotron Limited has no effect on the direction of Ford i.e., Ford and Biotron go up and down completely randomly.
Pair Corralation between Ford and Biotron
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.73 times more return on investment than Biotron. However, Ford Motor is 1.36 times less risky than Biotron. It trades about 0.0 of its potential returns per unit of risk. Biotron Limited is currently generating about -0.17 per unit of risk. If you would invest 1,122 in Ford Motor on August 28, 2024 and sell it today you would lose (12.00) from holding Ford Motor or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Biotron Limited
Performance |
| Timeline |
| Ford Motor |
| Biotron Limited |
Ford and Biotron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Biotron
The main advantage of trading using opposite Ford and Biotron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Biotron 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 Biotron will offset losses from the drop in Biotron's long position.The idea behind Ford Motor and Biotron Limited 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.| Biotron vs. biOasis Technologies | Biotron vs. Covalon Technologies | Biotron vs. Mosaic Immunoengineering | Biotron vs. Cellectis SA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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