Correlation Between Ford and PT Sunter

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

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

Diversification Opportunities for Ford and PT Sunter

-0.35

Correlation Coefficient

Ford  PT Sunter

Very good diversification

The 3 months correlation between Ford and SNLK is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PT Sunter Lakeside in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Sunter Lakeside 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 PT Sunter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Sunter Lakeside has no effect on the direction of Ford i.e., Ford and PT Sunter go up and down completely randomly.

Pair Corralation between Ford and PT Sunter

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the PT Sunter. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.96 times less risky than PT Sunter. The stock trades about -0.16 of its potential returns per unit of risk. The PT Sunter Lakeside is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest  69,000  in PT Sunter Lakeside on September 16, 2024 and sell it today you would earn a total of  29,000  from holding PT Sunter Lakeside or generate 42.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  PT Sunter Lakeside

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.

PT Sunter Lakeside

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PT Sunter Lakeside are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Sunter disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and PT Sunter

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

The idea behind Ford Motor and PT Sunter Lakeside 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.