Correlation Between Ford and Hong Kong
Can any of the company-specific risk be diversified away by investing in both Ford and Hong Kong 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 Hong Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Hong Kong Land, you can compare the effects of market volatilities on Ford and Hong Kong 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 Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hong Kong.
Diversification Opportunities for Ford and Hong Kong
Pay attention - limited upside
The 3 months correlation between Ford and Hong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hong Kong Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong Land 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 Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong Land has no effect on the direction of Ford i.e., Ford and Hong Kong go up and down completely randomly.
Pair Corralation between Ford and Hong Kong
Taking into account the 90-day investment horizon Ford Motor is expected to generate 17.44 times more return on investment than Hong Kong. However, Ford is 17.44 times more volatile than Hong Kong Land. It trades about 0.01 of its potential returns per unit of risk. Hong Kong Land is currently generating about 0.07 per unit of risk. If you would invest 1,125 in Ford Motor on September 3, 2024 and sell it today you would lose (27.00) from holding Ford Motor or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
Ford Motor vs. Hong Kong Land
Performance |
| Timeline |
| Ford Motor |
| Hong Kong Land |
Ford and Hong Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Hong Kong
The main advantage of trading using opposite Ford and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Hong Kong vs. Neometals | Hong Kong vs. McEwen Mining | Hong Kong vs. CompuGroup Medical AG | Hong Kong vs. Wheaton Precious Metals |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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