Correlation Between Ford and Platinum Asia
Can any of the company-specific risk be diversified away by investing in both Ford and Platinum Asia 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 Platinum Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Platinum Asia Investments, you can compare the effects of market volatilities on Ford and Platinum Asia 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 Platinum Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Platinum Asia.
Diversification Opportunities for Ford and Platinum Asia
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Platinum is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Platinum Asia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asia Investments 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 Platinum Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asia Investments has no effect on the direction of Ford i.e., Ford and Platinum Asia go up and down completely randomly.
Pair Corralation between Ford and Platinum Asia
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.13 times more return on investment than Platinum Asia. However, Ford is 2.13 times more volatile than Platinum Asia Investments. It trades about 0.0 of its potential returns per unit of risk. Platinum Asia Investments is currently generating about -0.31 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Platinum Asia Investments
Performance |
| Timeline |
| Ford Motor |
| Platinum Asia Investments |
Ford and Platinum Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Platinum Asia
The main advantage of trading using opposite Ford and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Platinum Asia 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 Platinum Asia will offset losses from the drop in Platinum Asia's long position.The idea behind Ford Motor and Platinum Asia Investments 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.| Platinum Asia vs. Stelar Metals | Platinum Asia vs. Centaurus Metals | Platinum Asia vs. Perseus Mining | Platinum Asia vs. Regal Funds Management |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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