Correlation Between Ford and China Carbon
Can any of the company-specific risk be diversified away by investing in both Ford and China Carbon 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 China Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and China Carbon Graphit, you can compare the effects of market volatilities on Ford and China Carbon 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 China Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and China Carbon.
Diversification Opportunities for Ford and China Carbon
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and China Carbon Graphit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Carbon Graphit 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 China Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Carbon Graphit has no effect on the direction of Ford i.e., Ford and China Carbon go up and down completely randomly.
Pair Corralation between Ford and China Carbon
If you would invest 1,015 in Ford Motor on September 1, 2024 and sell it today you would earn a total of 98.00 from holding Ford Motor or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. China Carbon Graphit
Performance |
| Timeline |
| Ford Motor |
| China Carbon Graphit |
Ford and China Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and China Carbon
The main advantage of trading using opposite Ford and China Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, China Carbon 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 China Carbon will offset losses from the drop in China Carbon's long position.The idea behind Ford Motor and China Carbon Graphit 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.| China Carbon vs. Focus Graphite | China Carbon vs. China Power Equipment | China Carbon vs. China Sun Grp | China Carbon vs. Northern Graphite |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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