Correlation Between Ford and PT Charlie
Can any of the company-specific risk be diversified away by investing in both Ford and PT Charlie 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 PT Charlie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and PT Charlie Hospital, you can compare the effects of market volatilities on Ford and PT Charlie 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 PT Charlie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and PT Charlie.
Diversification Opportunities for Ford and PT Charlie
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and RSCH is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PT Charlie Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Charlie Hospital 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 PT Charlie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Charlie Hospital has no effect on the direction of Ford i.e., Ford and PT Charlie go up and down completely randomly.
Pair Corralation between Ford and PT Charlie
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.03 times more return on investment than PT Charlie. However, Ford is 1.03 times more volatile than PT Charlie Hospital. It trades about 0.0 of its potential returns per unit of risk. PT Charlie Hospital is currently generating about -0.2 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. PT Charlie Hospital
Performance |
| Timeline |
| Ford Motor |
| PT Charlie Hospital |
Ford and PT Charlie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and PT Charlie
The main advantage of trading using opposite Ford and PT Charlie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, PT Charlie 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 PT Charlie will offset losses from the drop in PT Charlie's long position.The idea behind Ford Motor and PT Charlie Hospital 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.| PT Charlie vs. Bank Central Asia | PT Charlie vs. Bank Rakyat Indonesia | PT Charlie vs. Bayan Resources Tbk | PT Charlie vs. Bank Mandiri Persero |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |