Correlation Between Ford and Jiangsu Sainty

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

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

Diversification Opportunities for Ford and Jiangsu Sainty

0.11

Correlation Coefficient

Ford  Jiangsu Sainty

Average diversification

The 3 months correlation between Ford and Jiangsu is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Jiangsu Sainty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Sainty Corp 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 Jiangsu Sainty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Sainty Corp has no effect on the direction of Ford i.e., Ford and Jiangsu Sainty go up and down completely randomly.

Pair Corralation between Ford and Jiangsu Sainty

Taking into account the 90-day investment horizon Ford is expected to generate 1.94 times less return on investment than Jiangsu Sainty. In addition to that, Ford is 1.16 times more volatile than Jiangsu Sainty Corp. It trades about 0.05 of its total potential returns per unit of risk. Jiangsu Sainty Corp is currently generating about 0.1 per unit of volatility. If you would invest  433.00  in Jiangsu Sainty Corp on December 21, 2024 and sell it today you would earn a total of  42.00  from holding Jiangsu Sainty Corp or generate 9.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Ford Motor  vs.  Jiangsu Sainty Corp

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 3 (%) 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.

Jiangsu Sainty Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Sainty Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Sainty may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ford and Jiangsu Sainty

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

The idea behind Ford Motor and Jiangsu Sainty Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.