Correlation Between Ford and SCUT SA
Can any of the company-specific risk be diversified away by investing in both Ford and SCUT SA 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 SCUT SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and SCUT SA BACAU, you can compare the effects of market volatilities on Ford and SCUT SA 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 SCUT SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and SCUT SA.
Diversification Opportunities for Ford and SCUT SA
Very weak diversification
The 3 months correlation between Ford and SCUT is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SCUT SA BACAU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCUT SA BACAU 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 SCUT SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCUT SA BACAU has no effect on the direction of Ford i.e., Ford and SCUT SA go up and down completely randomly.
Pair Corralation between Ford and SCUT SA
Taking into account the 90-day investment horizon Ford is expected to generate 1.79 times less return on investment than SCUT SA. But when comparing it to its historical volatility, Ford Motor is 1.75 times less risky than SCUT SA. It trades about 0.23 of its potential returns per unit of risk. SCUT SA BACAU is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,620 in SCUT SA BACAU on September 1, 2024 and sell it today you would earn a total of 480.00 from holding SCUT SA BACAU or generate 18.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. SCUT SA BACAU
Performance |
| Timeline |
| Ford Motor |
| SCUT SA BACAU |
Ford and SCUT SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and SCUT SA
The main advantage of trading using opposite Ford and SCUT SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, SCUT SA 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 SCUT SA will offset losses from the drop in SCUT SA's long position.The idea behind Ford Motor and SCUT SA BACAU 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.| SCUT SA vs. IHUNT TECHNOLOGY IMPORT EXPORT | SCUT SA vs. Erste Group Bank | SCUT SA vs. Biofarm Bucure | SCUT SA vs. Safetech Innovations SA |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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