Correlation Between Ford and Indonesia Fibreboard
Can any of the company-specific risk be diversified away by investing in both Ford and Indonesia Fibreboard 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 Indonesia Fibreboard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Indonesia Fibreboard Industry, you can compare the effects of market volatilities on Ford and Indonesia Fibreboard 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 Indonesia Fibreboard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Indonesia Fibreboard.
Diversification Opportunities for Ford and Indonesia Fibreboard
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Indonesia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Indonesia Fibreboard Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indonesia Fibreboard 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 Indonesia Fibreboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indonesia Fibreboard has no effect on the direction of Ford i.e., Ford and Indonesia Fibreboard go up and down completely randomly.
Pair Corralation between Ford and Indonesia Fibreboard
Taking into account the 90-day investment horizon Ford is expected to generate 3.39 times less return on investment than Indonesia Fibreboard. But when comparing it to its historical volatility, Ford Motor is 1.15 times less risky than Indonesia Fibreboard. It trades about 0.02 of its potential returns per unit of risk. Indonesia Fibreboard Industry is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 13,867 in Indonesia Fibreboard Industry on September 3, 2024 and sell it today you would earn a total of 5,733 from holding Indonesia Fibreboard Industry or generate 41.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.33% |
| Values | Daily Returns |
Ford Motor vs. Indonesia Fibreboard Industry
Performance |
| Timeline |
| Ford Motor |
| Indonesia Fibreboard |
Ford and Indonesia Fibreboard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Indonesia Fibreboard
The main advantage of trading using opposite Ford and Indonesia Fibreboard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Indonesia Fibreboard 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 Indonesia Fibreboard will offset losses from the drop in Indonesia Fibreboard's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Indonesia Fibreboard vs. Gunung Raja Paksi | Indonesia Fibreboard vs. Satyamitra Kemas Lestari | Indonesia Fibreboard vs. Ifishdeco PT | Indonesia Fibreboard vs. Saraswanti Anugerah Makmur |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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