Correlation Between Ford and Mega Manunggal
Can any of the company-specific risk be diversified away by investing in both Ford and Mega Manunggal 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 Mega Manunggal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Mega Manunggal Property, you can compare the effects of market volatilities on Ford and Mega Manunggal 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 Mega Manunggal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Mega Manunggal.
Diversification Opportunities for Ford and Mega Manunggal
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Mega is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mega Manunggal Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Manunggal Property 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 Mega Manunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Manunggal Property has no effect on the direction of Ford i.e., Ford and Mega Manunggal go up and down completely randomly.
Pair Corralation between Ford and Mega Manunggal
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Mega Manunggal. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.06 times less risky than Mega Manunggal. The stock trades about -0.01 of its potential returns per unit of risk. The Mega Manunggal Property is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 33,600 in Mega Manunggal Property on September 1, 2024 and sell it today you would earn a total of 15,200 from holding Mega Manunggal Property or generate 45.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Ford Motor vs. Mega Manunggal Property
Performance |
| Timeline |
| Ford Motor |
| Mega Manunggal Property |
Ford and Mega Manunggal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Mega Manunggal
The main advantage of trading using opposite Ford and Mega Manunggal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Mega Manunggal 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 Mega Manunggal will offset losses from the drop in Mega Manunggal's long position.The idea behind Ford Motor and Mega Manunggal Property 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.| Mega Manunggal vs. Puradelta Lestari PT | Mega Manunggal vs. Jaya Real Property | Mega Manunggal vs. Bekasi Fajar Industrial | Mega Manunggal vs. Metropolitan Land Tbk |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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