Correlation Between Ford and Sogeclair

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

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

Diversification Opportunities for Ford and Sogeclair

0.44

Correlation Coefficient

Ford  Sogeclair

Very weak diversification

The 3 months correlation between Ford and Sogeclair is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sogeclair SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sogeclair SA 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 Sogeclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sogeclair SA has no effect on the direction of Ford i.e., Ford and Sogeclair go up and down completely randomly.

Pair Corralation between Ford and Sogeclair

Taking into account the 90-day investment horizon Ford is expected to generate 12.65 times less return on investment than Sogeclair. But when comparing it to its historical volatility, Ford Motor is 1.18 times less risky than Sogeclair. It trades about 0.02 of its potential returns per unit of risk. Sogeclair SA is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,725  in Sogeclair SA on December 29, 2024 and sell it today you would earn a total of  745.00  from holding Sogeclair SA or generate 43.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Ford Motor  vs.  Sogeclair SA

Ford Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) 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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sogeclair SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sogeclair SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Sogeclair reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Sogeclair

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

The idea behind Ford Motor and Sogeclair SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.