Correlation Between Ford and Kjell Group
Can any of the company-specific risk be diversified away by investing in both Ford and Kjell Group 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 Kjell Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Kjell Group AB, you can compare the effects of market volatilities on Ford and Kjell Group 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 Kjell Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Kjell Group.
Diversification Opportunities for Ford and Kjell Group
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Kjell is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Kjell Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kjell Group AB 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 Kjell Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kjell Group AB has no effect on the direction of Ford i.e., Ford and Kjell Group go up and down completely randomly.
Pair Corralation between Ford and Kjell Group
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.03 times more return on investment than Kjell Group. However, Ford is 1.03 times more volatile than Kjell Group AB. It trades about 0.0 of its potential returns per unit of risk. Kjell Group AB is currently generating about -0.65 per unit of risk. If you would invest 1,122 in Ford Motor on August 29, 2024 and sell it today you would lose (12.00) from holding Ford Motor or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Kjell Group AB
Performance |
| Timeline |
| Ford Motor |
| Kjell Group AB |
Ford and Kjell Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Kjell Group
The main advantage of trading using opposite Ford and Kjell Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Kjell Group 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 Kjell Group will offset losses from the drop in Kjell Group's long position.The idea behind Ford Motor and Kjell Group AB 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.| Kjell Group vs. Precise Biometrics AB | Kjell Group vs. Anoto Group AB | Kjell Group vs. Bong AB | Kjell Group vs. Episurf Medical AB |
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 CEOs Directory module to screen CEOs from public companies around the world.
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