Correlation Between Ford and Amlogic Shanghai

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

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

Diversification Opportunities for Ford and Amlogic Shanghai

0.06

Correlation Coefficient

Ford  Amlogic Shanghai

Significant diversification

The 3 months correlation between Ford and Amlogic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Amlogic Shanghai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amlogic Shanghai 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 Amlogic Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amlogic Shanghai has no effect on the direction of Ford i.e., Ford and Amlogic Shanghai go up and down completely randomly.

Pair Corralation between Ford and Amlogic Shanghai

Taking into account the 90-day investment horizon Ford is expected to generate 1.51 times less return on investment than Amlogic Shanghai. But when comparing it to its historical volatility, Ford Motor is 1.41 times less risky than Amlogic Shanghai. It trades about 0.01 of its potential returns per unit of risk. Amlogic Shanghai Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,168  in Amlogic Shanghai Co on September 19, 2024 and sell it today you would lose (78.00) from holding Amlogic Shanghai Co or give up 1.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.36%
Values	Daily Returns

Ford Motor  vs.  Amlogic Shanghai Co

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.

Amlogic Shanghai

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amlogic Shanghai Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amlogic Shanghai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Amlogic Shanghai

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

The idea behind Ford Motor and Amlogic Shanghai Co 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.