Correlation Between Ford and Adi Sarana

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

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

Diversification Opportunities for Ford and Adi Sarana

0.14

Correlation Coefficient

Ford  Adi Sarana

Average diversification

The 3 months correlation between Ford and Adi is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Adi Sarana Armada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adi Sarana Armada 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 Adi Sarana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adi Sarana Armada has no effect on the direction of Ford i.e., Ford and Adi Sarana go up and down completely randomly.

Pair Corralation between Ford and Adi Sarana

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Adi Sarana. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.05 times less risky than Adi Sarana. The stock trades about 0.0 of its potential returns per unit of risk. The Adi Sarana Armada is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  70,827  in Adi Sarana Armada on September 13, 2024 and sell it today you would earn a total of  673.00  from holding Adi Sarana Armada or generate 0.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.35%
Values	Daily Returns

Ford Motor  vs.  Adi Sarana Armada

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Adi Sarana Armada

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Adi Sarana Armada are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Adi Sarana is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ford and Adi Sarana

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

The idea behind Ford Motor and Adi Sarana Armada 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.