Correlation Between Ford and Shih Kuen

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

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

Diversification Opportunities for Ford and Shih Kuen

0.12

Correlation Coefficient

Ford  Shih Kuen

Average diversification

The 3 months correlation between Ford and Shih is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Shih Kuen Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shih Kuen Plastics 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 Shih Kuen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shih Kuen Plastics has no effect on the direction of Ford i.e., Ford and Shih Kuen go up and down completely randomly.

Pair Corralation between Ford and Shih Kuen

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Shih Kuen. In addition to that, Ford is 1.22 times more volatile than Shih Kuen Plastics. It trades about 0.0 of its total potential returns per unit of risk. Shih Kuen Plastics is currently generating about 0.05 per unit of volatility. If you would invest  2,833  in Shih Kuen Plastics on October 3, 2024 and sell it today you would earn a total of  1,337  from holding Shih Kuen Plastics or generate 47.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Ford Motor  vs.  Shih Kuen Plastics

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.

Shih Kuen Plastics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shih Kuen Plastics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ford and Shih Kuen

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

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