Correlation Between Ford and Radiant Utama
Can any of the company-specific risk be diversified away by investing in both Ford and Radiant Utama 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 Radiant Utama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Radiant Utama Interinsco, you can compare the effects of market volatilities on Ford and Radiant Utama 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 Radiant Utama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Radiant Utama.
Diversification Opportunities for Ford and Radiant Utama
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and Radiant is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Radiant Utama Interinsco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Utama Interinsco 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 Radiant Utama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Utama Interinsco has no effect on the direction of Ford i.e., Ford and Radiant Utama go up and down completely randomly.
Pair Corralation between Ford and Radiant Utama
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.97 times more return on investment than Radiant Utama. However, Ford is 1.97 times more volatile than Radiant Utama Interinsco. It trades about 0.02 of its potential returns per unit of risk. Radiant Utama Interinsco is currently generating about -0.03 per unit of risk. If you would invest 1,096 in Ford Motor on August 29, 2024 and sell it today you would earn a total of 14.00 from holding Ford Motor or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Ford Motor vs. Radiant Utama Interinsco
Performance |
| Timeline |
| Ford Motor |
| Radiant Utama Interinsco |
Ford and Radiant Utama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Radiant Utama
The main advantage of trading using opposite Ford and Radiant Utama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Radiant Utama 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 Radiant Utama will offset losses from the drop in Radiant Utama's long position.The idea behind Ford Motor and Radiant Utama Interinsco 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.| Radiant Utama vs. Perdana Karya Perkasa | Radiant Utama vs. Multi Indocitra Tbk | Radiant Utama vs. Rukun Raharja Tbk | Radiant Utama vs. Ricky Putra Globalindo |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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