Correlation Between Ford and Ascendas India

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

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

Diversification Opportunities for Ford and Ascendas India

-0.51

Correlation Coefficient

Ford  Ascendas India

Excellent diversification

The 3 months correlation between Ford and Ascendas is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ascendas India Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendas India Trust 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 Ascendas India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendas India Trust has no effect on the direction of Ford i.e., Ford and Ascendas India go up and down completely randomly.

Pair Corralation between Ford and Ascendas India

Taking into account the 90-day investment horizon Ford is expected to generate 1.01 times less return on investment than Ascendas India. But when comparing it to its historical volatility, Ford Motor is 1.02 times less risky than Ascendas India. It trades about 0.03 of its potential returns per unit of risk. Ascendas India Trust is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  72.00  in Ascendas India Trust on September 2, 2024 and sell it today you would earn a total of  7.00  from holding Ascendas India Trust or generate 9.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.76%
Values	Daily Returns

Ford Motor  vs.  Ascendas India Trust

Ford Motor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Ascendas India Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ascendas India Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Ascendas India is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ford and Ascendas India

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

The idea behind Ford Motor and Ascendas India Trust 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 Correlations module to find global opportunities by holding instruments from different markets.