Correlation Between Ford and Ateliers Mecaniques

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

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

Diversification Opportunities for Ford and Ateliers Mecaniques

-0.01

Correlation Coefficient

Ford  Ateliers Mecaniques

Good diversification

The 3 months correlation between Ford and Ateliers is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ateliers Mecaniques DIndonesie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ateliers Mecaniques 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 Ateliers Mecaniques. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ateliers Mecaniques has no effect on the direction of Ford i.e., Ford and Ateliers Mecaniques go up and down completely randomly.

Pair Corralation between Ford and Ateliers Mecaniques

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Ateliers Mecaniques. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.33 times less risky than Ateliers Mecaniques. The stock trades about -0.02 of its potential returns per unit of risk. The Ateliers Mecaniques DIndonesie is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  14,696  in Ateliers Mecaniques DIndonesie on September 15, 2024 and sell it today you would earn a total of  4.00  from holding Ateliers Mecaniques DIndonesie or generate 0.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Ateliers Mecaniques DIndonesie

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.

Ateliers Mecaniques

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ateliers Mecaniques DIndonesie has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Ateliers Mecaniques is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ford and Ateliers Mecaniques

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

The idea behind Ford Motor and Ateliers Mecaniques DIndonesie 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.