Correlation Between Ford and KG Eco

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

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

Diversification Opportunities for Ford and KG Eco

-0.09

Correlation Coefficient

Ford  KG Eco

Good diversification

The 3 months correlation between Ford and 151860 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco Technology 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 KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of Ford i.e., Ford and KG Eco go up and down completely randomly.

Pair Corralation between Ford and KG Eco

Taking into account the 90-day investment horizon Ford is expected to generate 2.14 times less return on investment than KG Eco. But when comparing it to its historical volatility, Ford Motor is 1.02 times less risky than KG Eco. It trades about 0.02 of its potential returns per unit of risk. KG Eco Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  474,000  in KG Eco Technology on December 28, 2024 and sell it today you would earn a total of  22,000  from holding KG Eco Technology or generate 4.64% 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.  KG Eco Technology

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

KG Eco Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KG Eco Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KG Eco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and KG Eco

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

The idea behind Ford Motor and KG Eco Technology 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.