Correlation Between Ford and Biovica International

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

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

Diversification Opportunities for Ford and Biovica International

-0.54

Correlation Coefficient

Ford  Biovica International

Excellent diversification

The 3 months correlation between Ford and Biovica is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Biovica International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biovica International 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 Biovica International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biovica International has no effect on the direction of Ford i.e., Ford and Biovica International go up and down completely randomly.

Pair Corralation between Ford and Biovica International

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.46 times more return on investment than Biovica International. However, Ford Motor is 2.19 times less risky than Biovica International. It trades about 0.02 of its potential returns per unit of risk. Biovica International AB is currently generating about -0.02 per unit of risk. If you would invest  957.00  in Ford Motor on September 12, 2024 and sell it today you would earn a total of  99.00  from holding Ford Motor or generate 10.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Ford Motor  vs.  Biovica International AB

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.

Biovica International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biovica International AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Biovica International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ford and Biovica International

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

The idea behind Ford Motor and Biovica International AB 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.