Correlation Between Ford and Vinacomin NuiBeo

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

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

Diversification Opportunities for Ford and Vinacomin NuiBeo

-0.13

Correlation Coefficient

Ford  Vinacomin NuiBeo

Good diversification

The 3 months correlation between Ford and Vinacomin is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Vinacomin NuiBeo Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinacomin NuiBeo Coal 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 Vinacomin NuiBeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinacomin NuiBeo Coal has no effect on the direction of Ford i.e., Ford and Vinacomin NuiBeo go up and down completely randomly.

Pair Corralation between Ford and Vinacomin NuiBeo

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.33 times more return on investment than Vinacomin NuiBeo. However, Ford is 1.33 times more volatile than Vinacomin NuiBeo Coal. It trades about -0.02 of its potential returns per unit of risk. Vinacomin NuiBeo Coal is currently generating about -0.16 per unit of risk. If you would invest  1,042  in Ford Motor on September 29, 2024 and sell it today you would lose (39.00) from holding Ford Motor or give up 3.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Ford Motor  vs.  Vinacomin NuiBeo Coal

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.

Vinacomin NuiBeo Coal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinacomin NuiBeo Coal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ford and Vinacomin NuiBeo

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

The idea behind Ford Motor and Vinacomin NuiBeo Coal 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.