Correlation Between Ford and COSCO SHIPPING
Can any of the company-specific risk be diversified away by investing in both Ford and COSCO SHIPPING 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 COSCO SHIPPING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and COSCO SHIPPING Holdings, you can compare the effects of market volatilities on Ford and COSCO SHIPPING 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 COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and COSCO SHIPPING.
Diversification Opportunities for Ford and COSCO SHIPPING
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and COSCO is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and COSCO SHIPPING Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Holdings 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 COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Holdings has no effect on the direction of Ford i.e., Ford and COSCO SHIPPING go up and down completely randomly.
Pair Corralation between Ford and COSCO SHIPPING
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.82 times more return on investment than COSCO SHIPPING. However, Ford Motor is 1.23 times less risky than COSCO SHIPPING. It trades about -0.01 of its potential returns per unit of risk. COSCO SHIPPING Holdings is currently generating about -0.03 per unit of risk. If you would invest 1,184 in Ford Motor on August 31, 2024 and sell it today you would lose (71.00) from holding Ford Motor or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. COSCO SHIPPING Holdings
Performance |
| Timeline |
| Ford Motor |
| COSCO SHIPPING Holdings |
Ford and COSCO SHIPPING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and COSCO SHIPPING
The main advantage of trading using opposite Ford and COSCO SHIPPING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, COSCO SHIPPING 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 COSCO SHIPPING will offset losses from the drop in COSCO SHIPPING's long position.The idea behind Ford Motor and COSCO SHIPPING Holdings 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.| COSCO SHIPPING vs. Mitsui OSK Lines | COSCO SHIPPING vs. Hapag Lloyd Aktiengesellschaft | COSCO SHIPPING vs. AP Moeller Maersk AS | COSCO SHIPPING vs. Orient Overseas Limited |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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