Correlation Between Ford and Fujian Boss

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

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

Diversification Opportunities for Ford and Fujian Boss

0.46

Correlation Coefficient

Ford  Fujian Boss

Very weak diversification

The 3 months correlation between Ford and Fujian is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Fujian Boss Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Boss Software 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 Fujian Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Boss Software has no effect on the direction of Ford i.e., Ford and Fujian Boss go up and down completely randomly.

Pair Corralation between Ford and Fujian Boss

Taking into account the 90-day investment horizon Ford is expected to generate 13.9 times less return on investment than Fujian Boss. But when comparing it to its historical volatility, Ford Motor is 2.2 times less risky than Fujian Boss. It trades about 0.03 of its potential returns per unit of risk. Fujian Boss Software is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,161  in Fujian Boss Software on September 3, 2024 and sell it today you would earn a total of  661.00  from holding Fujian Boss Software or generate 56.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.63%
Values	Daily Returns

Ford Motor  vs.  Fujian Boss Software

Ford Motor

Risk-Adjusted Performance

2 of 100

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.

Fujian Boss Software

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Boss Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Boss sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Fujian Boss

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

The idea behind Ford Motor and Fujian Boss Software 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.