Correlation Between Ford and Khon Kaen
Can any of the company-specific risk be diversified away by investing in both Ford and Khon Kaen 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 Khon Kaen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Khon Kaen Sugar, you can compare the effects of market volatilities on Ford and Khon Kaen 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 Khon Kaen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Khon Kaen.
Diversification Opportunities for Ford and Khon Kaen
Good diversification
The 3 months correlation between Ford and Khon is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Khon Kaen Sugar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khon Kaen Sugar 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 Khon Kaen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khon Kaen Sugar has no effect on the direction of Ford i.e., Ford and Khon Kaen go up and down completely randomly.
Pair Corralation between Ford and Khon Kaen
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.37 times more return on investment than Khon Kaen. However, Ford is 1.37 times more volatile than Khon Kaen Sugar. It trades about 0.17 of its potential returns per unit of risk. Khon Kaen Sugar is currently generating about -0.13 per unit of risk. If you would invest 1,033 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 77.00 from holding Ford Motor or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Khon Kaen Sugar
Performance |
| Timeline |
| Ford Motor |
| Khon Kaen Sugar |
Ford and Khon Kaen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Khon Kaen
The main advantage of trading using opposite Ford and Khon Kaen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Khon Kaen 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 Khon Kaen will offset losses from the drop in Khon Kaen's long position.The idea behind Ford Motor and Khon Kaen Sugar 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.| Khon Kaen vs. MK Restaurant Group | Khon Kaen vs. TRC Construction Public | Khon Kaen vs. Bangkok Expressway and | Khon Kaen vs. Lohakit Metal Public |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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