Correlation Between Ford and Perdana Gapura
Can any of the company-specific risk be diversified away by investing in both Ford and Perdana Gapura 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 Perdana Gapura into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Perdana Gapura Prima, you can compare the effects of market volatilities on Ford and Perdana Gapura 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 Perdana Gapura. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Perdana Gapura.
Diversification Opportunities for Ford and Perdana Gapura
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Perdana is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Perdana Gapura Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdana Gapura Prima 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 Perdana Gapura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdana Gapura Prima has no effect on the direction of Ford i.e., Ford and Perdana Gapura go up and down completely randomly.
Pair Corralation between Ford and Perdana Gapura
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.32 times more return on investment than Perdana Gapura. However, Ford is 1.32 times more volatile than Perdana Gapura Prima. It trades about 0.03 of its potential returns per unit of risk. Perdana Gapura Prima is currently generating about 0.01 per unit of risk. If you would invest 1,083 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 27.00 from holding Ford Motor or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Ford Motor vs. Perdana Gapura Prima
Performance |
| Timeline |
| Ford Motor |
| Perdana Gapura Prima |
Ford and Perdana Gapura Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Perdana Gapura
The main advantage of trading using opposite Ford and Perdana Gapura positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Perdana Gapura 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 Perdana Gapura will offset losses from the drop in Perdana Gapura's long position.The idea behind Ford Motor and Perdana Gapura Prima 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.| Perdana Gapura vs. Bukit Darmo Property | Perdana Gapura vs. Intiland Development Tbk | Perdana Gapura vs. Bekasi Asri Pemula | Perdana Gapura vs. Duta Anggada Realty |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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