Correlation Between Ford and Yen Bai

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

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

Diversification Opportunities for Ford and Yen Bai

0.16

Correlation Coefficient

Ford  Yen Bai

Average diversification

The 3 months correlation between Ford and Yen is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Yen Bai Forest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yen Bai Forest 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 Yen Bai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yen Bai Forest has no effect on the direction of Ford i.e., Ford and Yen Bai go up and down completely randomly.

Pair Corralation between Ford and Yen Bai

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Yen Bai. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.59 times less risky than Yen Bai. The stock trades about -0.36 of its potential returns per unit of risk. The Yen Bai Forest is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,400,000  in Yen Bai Forest on September 29, 2024 and sell it today you would earn a total of  100,000  from holding Yen Bai Forest or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Ford Motor  vs.  Yen Bai Forest

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.

Yen Bai Forest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yen Bai Forest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Ford and Yen Bai

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

The idea behind Ford Motor and Yen Bai Forest 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.