Correlation Between Ford and Tanah Laut
Can any of the company-specific risk be diversified away by investing in both Ford and Tanah Laut 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 Tanah Laut into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Tanah Laut Tbk, you can compare the effects of market volatilities on Ford and Tanah Laut 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 Tanah Laut. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Tanah Laut.
Diversification Opportunities for Ford and Tanah Laut
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Tanah is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Tanah Laut Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tanah Laut 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 Tanah Laut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tanah Laut Tbk has no effect on the direction of Ford i.e., Ford and Tanah Laut go up and down completely randomly.
Pair Corralation between Ford and Tanah Laut
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.54 times more return on investment than Tanah Laut. However, Ford Motor is 1.84 times less risky than Tanah Laut. It trades about 0.0 of its potential returns per unit of risk. Tanah Laut Tbk is currently generating about -0.03 per unit of risk. If you would invest 1,166 in Ford Motor on November 5, 2024 and sell it today you would lose (158.00) from holding Ford Motor or give up 13.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.34% |
| Values | Daily Returns |
Ford Motor vs. Tanah Laut Tbk
Performance |
| Timeline |
| Ford Motor |
| Tanah Laut Tbk |
Ford and Tanah Laut Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Tanah Laut
The main advantage of trading using opposite Ford and Tanah Laut positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Tanah Laut 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 Tanah Laut will offset losses from the drop in Tanah Laut's long position.The idea behind Ford Motor and Tanah Laut 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.| Tanah Laut vs. Inter Delta Tbk | Tanah Laut vs. Humpuss Intermoda Transportasi | Tanah Laut vs. Fortune Indonesia Tbk | Tanah Laut vs. PT MNC Energy |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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