Correlation Between Ford and CN YANGTPWR

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

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

Diversification Opportunities for Ford and CN YANGTPWR

-0.23

Correlation Coefficient

Ford  CN YANGTPWR

Very good diversification

The 3 months correlation between Ford and CYZB is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CN YANGTPWR GDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN YANGTPWR GDR 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 CN YANGTPWR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN YANGTPWR GDR has no effect on the direction of Ford i.e., Ford and CN YANGTPWR go up and down completely randomly.

Pair Corralation between Ford and CN YANGTPWR

Taking into account the 90-day investment horizon Ford is expected to generate 4.53 times less return on investment than CN YANGTPWR. But when comparing it to its historical volatility, Ford Motor is 1.0 times less risky than CN YANGTPWR. It trades about 0.01 of its potential returns per unit of risk. CN YANGTPWR GDR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,275  in CN YANGTPWR GDR on September 19, 2024 and sell it today you would earn a total of  1,245  from holding CN YANGTPWR GDR or generate 54.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.02%
Values	Daily Returns

Ford Motor  vs.  CN YANGTPWR GDR

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CN YANGTPWR GDR

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Ford and CN YANGTPWR

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

The idea behind Ford Motor and CN YANGTPWR GDR 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.