Correlation Between Ford and Kmc Properties
Can any of the company-specific risk be diversified away by investing in both Ford and Kmc Properties 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 Kmc Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Kmc Properties ASA, you can compare the effects of market volatilities on Ford and Kmc Properties 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 Kmc Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Kmc Properties.
Diversification Opportunities for Ford and Kmc Properties
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and Kmc is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Kmc Properties ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmc Properties ASA 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 Kmc Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kmc Properties ASA has no effect on the direction of Ford i.e., Ford and Kmc Properties go up and down completely randomly.
Pair Corralation between Ford and Kmc Properties
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.09 times more return on investment than Kmc Properties. However, Ford Motor is 11.17 times less risky than Kmc Properties. It trades about 0.23 of its potential returns per unit of risk. Kmc Properties ASA is currently generating about -0.22 per unit of risk. If you would invest 1,015 in Ford Motor on September 1, 2024 and sell it today you would earn a total of 98.00 from holding Ford Motor or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Ford Motor vs. Kmc Properties ASA
Performance |
| Timeline |
| Ford Motor |
| Kmc Properties ASA |
Ford and Kmc Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Kmc Properties
The main advantage of trading using opposite Ford and Kmc Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Kmc Properties 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 Kmc Properties will offset losses from the drop in Kmc Properties' long position.The idea behind Ford Motor and Kmc Properties ASA 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.| Kmc Properties vs. Entra ASA | Kmc Properties vs. Selvaag Bolig ASA | Kmc Properties vs. Baltic Sea Properties |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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