Correlation Between Ford and DCI Indonesia
Can any of the company-specific risk be diversified away by investing in both Ford and DCI Indonesia 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 DCI Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and DCI Indonesia Tbk, you can compare the effects of market volatilities on Ford and DCI Indonesia 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 DCI Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and DCI Indonesia.
Diversification Opportunities for Ford and DCI Indonesia
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and DCI is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and DCI Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCI Indonesia Tbk 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 DCI Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCI Indonesia Tbk has no effect on the direction of Ford i.e., Ford and DCI Indonesia go up and down completely randomly.
Pair Corralation between Ford and DCI Indonesia
Taking into account the 90-day investment horizon Ford is expected to generate 6.68 times less return on investment than DCI Indonesia. But when comparing it to its historical volatility, Ford Motor is 1.26 times less risky than DCI Indonesia. It trades about 0.01 of its potential returns per unit of risk. DCI Indonesia Tbk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,640,000 in DCI Indonesia Tbk on August 28, 2024 and sell it today you would earn a total of 837,500 from holding DCI Indonesia Tbk or generate 23.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Ford Motor vs. DCI Indonesia Tbk
Performance |
| Timeline |
| Ford Motor |
| DCI Indonesia Tbk |
Ford and DCI Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and DCI Indonesia
The main advantage of trading using opposite Ford and DCI Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, DCI Indonesia 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 DCI Indonesia will offset losses from the drop in DCI Indonesia's long position.The idea behind Ford Motor and DCI Indonesia Tbk 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.| DCI Indonesia vs. Bank Artos Indonesia | DCI Indonesia vs. Elang Mahkota Teknologi | DCI Indonesia vs. Indointernet Tbk PT | DCI Indonesia vs. PT Bukalapak |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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