Correlation Between Ford and Supra Boga
Can any of the company-specific risk be diversified away by investing in both Ford and Supra Boga 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 Supra Boga into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Supra Boga Lestari, you can compare the effects of market volatilities on Ford and Supra Boga 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 Supra Boga. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Supra Boga.
Diversification Opportunities for Ford and Supra Boga
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Supra is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Supra Boga Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supra Boga Lestari 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 Supra Boga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supra Boga Lestari has no effect on the direction of Ford i.e., Ford and Supra Boga go up and down completely randomly.
Pair Corralation between Ford and Supra Boga
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.16 times more return on investment than Supra Boga. However, Ford is 1.16 times more volatile than Supra Boga Lestari. It trades about 0.17 of its potential returns per unit of risk. Supra Boga Lestari is currently generating about -0.11 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 | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Supra Boga Lestari
Performance |
| Timeline |
| Ford Motor |
| Supra Boga Lestari |
Ford and Supra Boga Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Supra Boga
The main advantage of trading using opposite Ford and Supra Boga positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Supra Boga 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 Supra Boga will offset losses from the drop in Supra Boga's long position.The idea behind Ford Motor and Supra Boga Lestari 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.| Supra Boga vs. Nippon Indosari Corpindo | Supra Boga vs. Ramayana Lestari Sentosa | Supra Boga vs. Midi Utama Indonesia | Supra Boga vs. Hero Supermarket 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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