Correlation Between Ford and Pasifik Eurasia

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

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

Diversification Opportunities for Ford and Pasifik Eurasia

-0.25

Correlation Coefficient

Ford  Pasifik Eurasia

Very good diversification

The 3 months correlation between Ford and Pasifik is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pasifik Eurasia Lojistik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pasifik Eurasia Lojistik 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 Pasifik Eurasia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pasifik Eurasia Lojistik has no effect on the direction of Ford i.e., Ford and Pasifik Eurasia go up and down completely randomly.

Pair Corralation between Ford and Pasifik Eurasia

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Pasifik Eurasia. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.44 times less risky than Pasifik Eurasia. The stock trades about 0.0 of its potential returns per unit of risk. The Pasifik Eurasia Lojistik is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,121  in Pasifik Eurasia Lojistik on September 26, 2024 and sell it today you would earn a total of  833.00  from holding Pasifik Eurasia Lojistik or generate 39.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

Ford Motor  vs.  Pasifik Eurasia Lojistik

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.

Pasifik Eurasia Lojistik

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pasifik Eurasia Lojistik are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Pasifik Eurasia demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Pasifik Eurasia

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

The idea behind Ford Motor and Pasifik Eurasia Lojistik 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.