Correlation Between Ford and Com7 PCL
Can any of the company-specific risk be diversified away by investing in both Ford and Com7 PCL 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 Com7 PCL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Com7 PCL, you can compare the effects of market volatilities on Ford and Com7 PCL 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 Com7 PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Com7 PCL.
Diversification Opportunities for Ford and Com7 PCL
Very weak diversification
The 3 months correlation between Ford and Com7 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Com7 PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Com7 PCL 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 Com7 PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Com7 PCL has no effect on the direction of Ford i.e., Ford and Com7 PCL go up and down completely randomly.
Pair Corralation between Ford and Com7 PCL
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.74 times more return on investment than Com7 PCL. However, Ford Motor is 1.35 times less risky than Com7 PCL. It trades about 0.13 of its potential returns per unit of risk. Com7 PCL is currently generating about -0.29 per unit of risk. If you would invest 965.00 in Ford Motor on November 3, 2024 and sell it today you would earn a total of 43.00 from holding Ford Motor or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Ford Motor vs. Com7 PCL
Performance |
| Timeline |
| Ford Motor |
| Com7 PCL |
Ford and Com7 PCL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Com7 PCL
The main advantage of trading using opposite Ford and Com7 PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Com7 PCL 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 Com7 PCL will offset losses from the drop in Com7 PCL's long position.The idea behind Ford Motor and Com7 PCL 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.| Com7 PCL vs. CP ALL Public | Com7 PCL vs. Home Product Center | Com7 PCL vs. Minor International Public | Com7 PCL vs. Bangkok Dusit Medical |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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