Correlation Between Ford and Makina Takim

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

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

Diversification Opportunities for Ford and Makina Takim

-0.4

Correlation Coefficient

Ford  Makina Takim

Very good diversification

The 3 months correlation between Ford and Makina is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Makina Takim Endustrisi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makina Takim Endustrisi 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 Makina Takim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makina Takim Endustrisi has no effect on the direction of Ford i.e., Ford and Makina Takim go up and down completely randomly.

Pair Corralation between Ford and Makina Takim

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Makina Takim. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.76 times less risky than Makina Takim. The stock trades about -0.23 of its potential returns per unit of risk. The Makina Takim Endustrisi is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  628.00  in Makina Takim Endustrisi on September 22, 2024 and sell it today you would earn a total of  46.00  from holding Makina Takim Endustrisi or generate 7.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Ford Motor  vs.  Makina Takim Endustrisi

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.

Makina Takim Endustrisi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Makina Takim Endustrisi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Makina Takim is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ford and Makina Takim

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

The idea behind Ford Motor and Makina Takim Endustrisi 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.