Correlation Between Ford and China Medical
Can any of the company-specific risk be diversified away by investing in both Ford and China Medical 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 Medical 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 Medical System, you can compare the effects of market volatilities on Ford and China Medical 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 Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and China Medical.
Diversification Opportunities for Ford and China Medical
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 Medical System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Medical System 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 Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Medical System has no effect on the direction of Ford i.e., Ford and China Medical go up and down completely randomly.
Pair Corralation between Ford and China Medical
Taking into account the 90-day investment horizon Ford is expected to generate 26.07 times less return on investment than China Medical. But when comparing it to its historical volatility, Ford Motor is 5.59 times less risky than China Medical. It trades about 0.01 of its potential returns per unit of risk. China Medical System is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 138.00 in China Medical System on September 3, 2024 and sell it today you would lose (45.00) from holding China Medical System or give up 32.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 46.11% |
| Values | Daily Returns |
Ford Motor vs. China Medical System
Performance |
| Timeline |
| Ford Motor |
| China Medical System |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and China Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and China Medical
The main advantage of trading using opposite Ford and China Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, China Medical 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 Medical will offset losses from the drop in China Medical's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| China Medical vs. Eisai Co | China Medical vs. Dr Reddys Laboratories | China Medical vs. ANI Pharmaceuticals | China Medical vs. Lantheus Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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