Correlation Between Ford and Xenetic Biosciences
Can any of the company-specific risk be diversified away by investing in both Ford and Xenetic Biosciences 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 Xenetic Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Xenetic Biosciences, you can compare the effects of market volatilities on Ford and Xenetic Biosciences 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 Xenetic Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Xenetic Biosciences.
Diversification Opportunities for Ford and Xenetic Biosciences
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Xenetic is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Xenetic Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenetic Biosciences 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 Xenetic Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenetic Biosciences has no effect on the direction of Ford i.e., Ford and Xenetic Biosciences go up and down completely randomly.
Pair Corralation between Ford and Xenetic Biosciences
Taking into account the 90-day investment horizon Ford is expected to generate 2.84 times less return on investment than Xenetic Biosciences. But when comparing it to its historical volatility, Ford Motor is 2.22 times less risky than Xenetic Biosciences. It trades about 0.04 of its potential returns per unit of risk. Xenetic Biosciences is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 392.00 in Xenetic Biosciences on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Xenetic Biosciences or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Xenetic Biosciences
Performance |
| Timeline |
| Ford Motor |
| Xenetic Biosciences |
Ford and Xenetic Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Xenetic Biosciences
The main advantage of trading using opposite Ford and Xenetic Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Xenetic Biosciences 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 Xenetic Biosciences will offset losses from the drop in Xenetic Biosciences' long position.The idea behind Ford Motor and Xenetic Biosciences 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.| Xenetic Biosciences vs. Eliem Therapeutics | Xenetic Biosciences vs. HCW Biologics | Xenetic Biosciences vs. Scpharmaceuticals | Xenetic Biosciences vs. Milestone Pharmaceuticals |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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