Correlation Between Ford and Abliva AB

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

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

Diversification Opportunities for Ford and Abliva AB

-0.61

Correlation Coefficient

Ford  Abliva AB

Excellent diversification

The 3 months correlation between Ford and Abliva is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Abliva AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abliva AB 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 Abliva AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abliva AB has no effect on the direction of Ford i.e., Ford and Abliva AB go up and down completely randomly.

Pair Corralation between Ford and Abliva AB

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Abliva AB. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 12.8 times less risky than Abliva AB. The stock trades about -0.07 of its potential returns per unit of risk. The Abliva AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Abliva AB on October 27, 2024 and sell it today you would earn a total of  27.00  from holding Abliva AB or generate 168.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Ford Motor  vs.  Abliva AB

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.

Abliva AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abliva AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Abliva AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Abliva AB

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

The idea behind Ford Motor and Abliva AB 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.