Correlation Between Ford and Tsinghuatongfang
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By analyzing existing cross correlation between Ford Motor and Tsinghuatongfang Co, you can compare the effects of market volatilities on Ford and Tsinghuatongfang 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 Tsinghuatongfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Tsinghuatongfang.
Diversification Opportunities for Ford and Tsinghuatongfang
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Tsinghuatongfang is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Tsinghuatongfang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsinghuatongfang 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 Tsinghuatongfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsinghuatongfang has no effect on the direction of Ford i.e., Ford and Tsinghuatongfang go up and down completely randomly.
Pair Corralation between Ford and Tsinghuatongfang
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Tsinghuatongfang. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.14 times less risky than Tsinghuatongfang. The stock trades about -0.5 of its potential returns per unit of risk. The Tsinghuatongfang Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 721.00 in Tsinghuatongfang Co on September 24, 2024 and sell it today you would earn a total of 43.00 from holding Tsinghuatongfang Co or generate 5.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Ford Motor vs. Tsinghuatongfang Co
Performance |
Timeline |
Ford Motor |
Tsinghuatongfang |
Ford and Tsinghuatongfang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Tsinghuatongfang
The main advantage of trading using opposite Ford and Tsinghuatongfang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Tsinghuatongfang 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 Tsinghuatongfang will offset losses from the drop in Tsinghuatongfang's long position.The idea behind Ford Motor and Tsinghuatongfang Co 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.Tsinghuatongfang vs. Industrial and Commercial | Tsinghuatongfang vs. Agricultural Bank of | Tsinghuatongfang vs. China Construction Bank | Tsinghuatongfang vs. Bank of China |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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