Correlation Between Ford and Siantar Top
Can any of the company-specific risk be diversified away by investing in both Ford and Siantar Top 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 Siantar Top into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Siantar Top Tbk, you can compare the effects of market volatilities on Ford and Siantar Top 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 Siantar Top. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Siantar Top.
Diversification Opportunities for Ford and Siantar Top
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Siantar is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Siantar Top Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siantar Top Tbk 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 Siantar Top. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siantar Top Tbk has no effect on the direction of Ford i.e., Ford and Siantar Top go up and down completely randomly.
Pair Corralation between Ford and Siantar Top
Taking into account the 90-day investment horizon Ford is expected to generate 11.36 times less return on investment than Siantar Top. But when comparing it to its historical volatility, Ford Motor is 1.56 times less risky than Siantar Top. It trades about 0.01 of its potential returns per unit of risk. Siantar Top Tbk is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 802,500 in Siantar Top Tbk on August 27, 2024 and sell it today you would earn a total of 617,500 from holding Siantar Top Tbk or generate 76.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.71% |
| Values | Daily Returns |
Ford Motor vs. Siantar Top Tbk
Performance |
| Timeline |
| Ford Motor |
| Siantar Top Tbk |
Ford and Siantar Top Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Siantar Top
The main advantage of trading using opposite Ford and Siantar Top positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Siantar Top 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 Siantar Top will offset losses from the drop in Siantar Top's long position.The idea behind Ford Motor and Siantar Top Tbk 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.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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |