Correlation Between Ford and Nanjing Canatal

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

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

Diversification Opportunities for Ford and Nanjing Canatal

-0.48

Correlation Coefficient

Ford  Nanjing Canatal

Very good diversification

The 3 months correlation between Ford and Nanjing is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Nanjing Canatal Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Canatal Data 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 Nanjing Canatal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Canatal Data has no effect on the direction of Ford i.e., Ford and Nanjing Canatal go up and down completely randomly.

Pair Corralation between Ford and Nanjing Canatal

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Nanjing Canatal. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.87 times less risky than Nanjing Canatal. The stock trades about -0.03 of its potential returns per unit of risk. The Nanjing Canatal Data is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  681.00  in Nanjing Canatal Data on October 9, 2024 and sell it today you would earn a total of  45.00  from holding Nanjing Canatal Data or generate 6.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Ford Motor  vs.  Nanjing Canatal Data

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

Nanjing Canatal Data

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Canatal Data are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanjing Canatal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ford and Nanjing Canatal

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

The idea behind Ford Motor and Nanjing Canatal Data 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.