Correlation Between Ford and Alimak Hek

Can any of the company-specific risk be diversified away by investing in both Ford and Alimak Hek 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 Alimak Hek into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ford Motor and Alimak Hek Group, you can compare the effects of market volatilities on Ford and Alimak Hek 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 Alimak Hek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Alimak Hek.

Diversification Opportunities for Ford and Alimak Hek

0.26

Correlation Coefficient

Ford  Alimak Hek

Modest diversification

The 3 months correlation between Ford and Alimak is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Alimak Hek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimak Hek Group 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 Alimak Hek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimak Hek Group has no effect on the direction of Ford i.e., Ford and Alimak Hek go up and down completely randomly.

Pair Corralation between Ford and Alimak Hek

Taking into account the 90-day investment horizon Ford is expected to generate 37.55 times less return on investment than Alimak Hek. In addition to that, Ford is 1.44 times more volatile than Alimak Hek Group. It trades about 0.0 of its total potential returns per unit of risk. Alimak Hek Group is currently generating about 0.12 per unit of volatility. If you would invest  7,447  in Alimak Hek Group on September 12, 2024 and sell it today you would earn a total of  4,153  from holding Alimak Hek Group or generate 55.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Alimak Hek Group

Ford Motor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Alimak Hek Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alimak Hek Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alimak Hek may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ford and Alimak Hek

The main advantage of trading using opposite Ford and Alimak Hek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Alimak Hek 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 Alimak Hek will offset losses from the drop in Alimak Hek's long position.

The idea behind Ford Motor and Alimak Hek Group 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.