Correlation Between Ford and Jiangsu Zhongtian

Can any of the company-specific risk be diversified away by investing in both Ford and Jiangsu Zhongtian 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 Zhongtian 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 Zhongtian Technology, you can compare the effects of market volatilities on Ford and Jiangsu Zhongtian 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 Zhongtian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Jiangsu Zhongtian.

Diversification Opportunities for Ford and Jiangsu Zhongtian

0.58

Correlation Coefficient

Ford  Jiangsu Zhongtian

Very weak diversification

The 3 months correlation between Ford and Jiangsu is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Jiangsu Zhongtian Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Zhongtian 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 Zhongtian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Zhongtian has no effect on the direction of Ford i.e., Ford and Jiangsu Zhongtian go up and down completely randomly.

Pair Corralation between Ford and Jiangsu Zhongtian

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.1 times more return on investment than Jiangsu Zhongtian. However, Ford is 1.1 times more volatile than Jiangsu Zhongtian Technology. It trades about -0.11 of its potential returns per unit of risk. Jiangsu Zhongtian Technology is currently generating about -0.15 per unit of risk. If you would invest  1,040  in Ford Motor on December 4, 2024 and sell it today you would lose (128.00) from holding Ford Motor or give up 12.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

Ford Motor  vs.  Jiangsu Zhongtian Technology

Ford Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Jiangsu Zhongtian

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiangsu Zhongtian Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ford and Jiangsu Zhongtian

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

The idea behind Ford Motor and Jiangsu Zhongtian 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.