Correlation Between Ford and Bank Ocbc
Can any of the company-specific risk be diversified away by investing in both Ford and Bank Ocbc 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 Bank Ocbc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Bank Ocbc Nisp, you can compare the effects of market volatilities on Ford and Bank Ocbc 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 Bank Ocbc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Bank Ocbc.
Diversification Opportunities for Ford and Bank Ocbc
Poor diversification
The 3 months correlation between Ford and Bank is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Bank Ocbc Nisp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Ocbc Nisp 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 Bank Ocbc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Ocbc Nisp has no effect on the direction of Ford i.e., Ford and Bank Ocbc go up and down completely randomly.
Pair Corralation between Ford and Bank Ocbc
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Bank Ocbc. In addition to that, Ford is 1.54 times more volatile than Bank Ocbc Nisp. It trades about -0.09 of its total potential returns per unit of risk. Bank Ocbc Nisp is currently generating about 0.01 per unit of volatility. If you would invest 133,500 in Bank Ocbc Nisp on November 4, 2024 and sell it today you would earn a total of 0.00 from holding Bank Ocbc Nisp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.5% |
| Values | Daily Returns |
Ford Motor vs. Bank Ocbc Nisp
Performance |
| Timeline |
| Ford Motor |
| Bank Ocbc Nisp |
Ford and Bank Ocbc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Bank Ocbc
The main advantage of trading using opposite Ford and Bank Ocbc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Bank Ocbc 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 Bank Ocbc will offset losses from the drop in Bank Ocbc's long position.The idea behind Ford Motor and Bank Ocbc Nisp 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.| Bank Ocbc vs. Bank Mega Tbk | Bank Ocbc vs. Bank Pan Indonesia | Bank Ocbc vs. Bank Permata Tbk | Bank Ocbc vs. Bank Cimb Niaga |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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