Correlation Between Ford and Sany Heavy

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

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

Diversification Opportunities for Ford and Sany Heavy

-0.04

Correlation Coefficient

Ford  Sany Heavy

Good diversification

The 3 months correlation between Ford and Sany is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sany Heavy Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sany Heavy Energy 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 Sany Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sany Heavy Energy has no effect on the direction of Ford i.e., Ford and Sany Heavy go up and down completely randomly.

Pair Corralation between Ford and Sany Heavy

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Sany Heavy. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.31 times less risky than Sany Heavy. The stock trades about -0.1 of its potential returns per unit of risk. The Sany Heavy Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,918  in Sany Heavy Energy on September 22, 2024 and sell it today you would earn a total of  282.00  from holding Sany Heavy Energy or generate 9.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Ford Motor  vs.  Sany Heavy Energy

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sany Heavy Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sany Heavy Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sany Heavy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Sany Heavy

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

The idea behind Ford Motor and Sany Heavy Energy 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.