Correlation Between Ford and KyungIn Electronics

Can any of the company-specific risk be diversified away by investing in both Ford and KyungIn 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 KyungIn 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 KyungIn Electronics Co, you can compare the effects of market volatilities on Ford and KyungIn 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 KyungIn Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and KyungIn Electronics.

Diversification Opportunities for Ford and KyungIn Electronics

-0.02

Correlation Coefficient

Ford  KyungIn Electronics

Good diversification

The 3 months correlation between Ford and KyungIn is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and KyungIn Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KyungIn 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 KyungIn Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KyungIn Electronics has no effect on the direction of Ford i.e., Ford and KyungIn Electronics go up and down completely randomly.

Pair Corralation between Ford and KyungIn Electronics

Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.45 times more return on investment than KyungIn Electronics. However, Ford is 2.45 times more volatile than KyungIn Electronics Co. It trades about 0.02 of its potential returns per unit of risk. KyungIn Electronics Co is currently generating about -0.15 per unit of risk. If you would invest  957.00  in Ford Motor on December 28, 2024 and sell it today you would earn a total of  15.00  from holding Ford Motor or generate 1.57% return on investment over 90 days.

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

Ford Motor  vs.  KyungIn 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 1 (%) 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.

KyungIn Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days KyungIn Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ford and KyungIn Electronics

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

The idea behind Ford Motor and KyungIn 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.