Correlation Between Ford and Daesung Industrial

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

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

Diversification Opportunities for Ford and Daesung Industrial

0.0

Correlation Coefficient

Ford  Daesung Industrial

Pay attention - limited upside

The 3 months correlation between Ford and Daesung is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Daesung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Industrial 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 Daesung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Industrial has no effect on the direction of Ford i.e., Ford and Daesung Industrial go up and down completely randomly.

Pair Corralation between Ford and Daesung Industrial

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.87 times more return on investment than Daesung Industrial. However, Ford Motor is 1.15 times less risky than Daesung Industrial. It trades about -0.03 of its potential returns per unit of risk. Daesung Industrial Co is currently generating about -0.06 per unit of risk. If you would invest  1,035  in Ford Motor on October 8, 2024 and sell it today you would lose (47.00) from holding Ford Motor or give up 4.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Ford Motor  vs.  Daesung Industrial Co

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.

Daesung Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daesung Industrial 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 Daesung Industrial

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

The idea behind Ford Motor and Daesung Industrial 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.