Correlation Between Ford and Daeduck Electronics

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

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

Diversification Opportunities for Ford and Daeduck Electronics

0.05

Correlation Coefficient

Ford  Daeduck Electronics

Significant diversification

The 3 months correlation between Ford and Daeduck is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Daeduck Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daeduck Electronics 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 Daeduck Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daeduck Electronics has no effect on the direction of Ford i.e., Ford and Daeduck Electronics go up and down completely randomly.

Pair Corralation between Ford and Daeduck Electronics

Taking into account the 90-day investment horizon Ford is expected to generate 1.83 times less return on investment than Daeduck Electronics. In addition to that, Ford is 3.19 times more volatile than Daeduck Electronics Co. It trades about 0.04 of its total potential returns per unit of risk. Daeduck Electronics Co is currently generating about 0.22 per unit of volatility. If you would invest  660,000  in Daeduck Electronics Co on December 29, 2024 and sell it today you would earn a total of  55,000  from holding Daeduck Electronics Co or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Ford Motor  vs.  Daeduck Electronics Co

Ford Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Daeduck Electronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Daeduck Electronics Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daeduck Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ford and Daeduck Electronics

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

The idea behind Ford Motor and Daeduck Electronics Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.