Correlation Between Ford and San Neng

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

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

Diversification Opportunities for Ford and San Neng

-0.33

Correlation Coefficient

Ford  San Neng

Very good diversification

The 3 months correlation between Ford and San is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and San Neng Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Neng Group 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 San Neng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Neng Group has no effect on the direction of Ford i.e., Ford and San Neng go up and down completely randomly.

Pair Corralation between Ford and San Neng

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the San Neng. In addition to that, Ford is 2.34 times more volatile than San Neng Group. It trades about -0.23 of its total potential returns per unit of risk. San Neng Group is currently generating about 0.02 per unit of volatility. If you would invest  4,215  in San Neng Group on September 17, 2024 and sell it today you would earn a total of  10.00  from holding San Neng Group or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Ford Motor  vs.  San Neng Group

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.

San Neng Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in San Neng Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, San Neng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ford and San Neng

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

The idea behind Ford Motor and San Neng Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..