Correlation Between Ford and IHH Healthcare
Can any of the company-specific risk be diversified away by investing in both Ford and IHH Healthcare 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 IHH Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and IHH Healthcare Berhad, you can compare the effects of market volatilities on Ford and IHH Healthcare 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 IHH Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and IHH Healthcare.
Diversification Opportunities for Ford and IHH Healthcare
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and IHH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and IHH Healthcare Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHH Healthcare Berhad 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 IHH Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHH Healthcare Berhad has no effect on the direction of Ford i.e., Ford and IHH Healthcare go up and down completely randomly.
Pair Corralation between Ford and IHH Healthcare
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.44 times more return on investment than IHH Healthcare. However, Ford is 1.44 times more volatile than IHH Healthcare Berhad. It trades about 0.02 of its potential returns per unit of risk. IHH Healthcare Berhad is currently generating about -0.01 per unit of risk. If you would invest 957.00 in Ford Motor on September 12, 2024 and sell it today you would earn a total of 99.00 from holding Ford Motor or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 70.51% |
| Values | Daily Returns |
Ford Motor vs. IHH Healthcare Berhad
Performance |
| Timeline |
| Ford Motor |
| IHH Healthcare Berhad |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and IHH Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and IHH Healthcare
The main advantage of trading using opposite Ford and IHH Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, IHH Healthcare 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 IHH Healthcare will offset losses from the drop in IHH Healthcare's long position.The idea behind Ford Motor and IHH Healthcare Berhad 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.| IHH Healthcare vs. RCS MediaGroup SpA | IHH Healthcare vs. Emerson Radio | IHH Healthcare vs. Mediag3 | IHH Healthcare vs. Xponential Fitness |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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