Correlation Between Ford and ISU Abxis
Can any of the company-specific risk be diversified away by investing in both Ford and ISU Abxis 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 ISU Abxis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and ISU Abxis Co, you can compare the effects of market volatilities on Ford and ISU Abxis 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 ISU Abxis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ISU Abxis.
Diversification Opportunities for Ford and ISU Abxis
Good diversification
The 3 months correlation between Ford and ISU is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ISU Abxis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISU Abxis 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 ISU Abxis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISU Abxis has no effect on the direction of Ford i.e., Ford and ISU Abxis go up and down completely randomly.
Pair Corralation between Ford and ISU Abxis
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.86 times more return on investment than ISU Abxis. However, Ford Motor is 1.17 times less risky than ISU Abxis. It trades about -0.02 of its potential returns per unit of risk. ISU Abxis Co is currently generating about -0.02 per unit of risk. If you would invest 1,164 in Ford Motor on September 20, 2024 and sell it today you would lose (195.00) from holding Ford Motor or give up 16.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 97.18% |
Values | Daily Returns |
Ford Motor vs. ISU Abxis Co
Performance |
Timeline |
Ford Motor |
ISU Abxis |
Ford and ISU Abxis Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and ISU Abxis
The main advantage of trading using opposite Ford and ISU Abxis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ISU Abxis 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 ISU Abxis will offset losses from the drop in ISU Abxis' long position.The idea behind Ford Motor and ISU Abxis 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.ISU Abxis vs. Samsung Biologics Co | ISU Abxis vs. SK Bioscience Co | ISU Abxis vs. Green Cross Lab | ISU Abxis vs. MedPacto |
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 Stocks Directory module to find actively traded stocks across global markets.
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