Correlation Between Ford and Apetit Oyj

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

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

Diversification Opportunities for Ford and Apetit Oyj

-0.72

Correlation Coefficient

Ford  Apetit Oyj

Pay attention - limited upside

The 3 months correlation between Ford and Apetit is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Apetit Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apetit Oyj 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 Apetit Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apetit Oyj has no effect on the direction of Ford i.e., Ford and Apetit Oyj go up and down completely randomly.

Pair Corralation between Ford and Apetit Oyj

Taking into account the 90-day investment horizon Ford is expected to generate 1.1 times less return on investment than Apetit Oyj. But when comparing it to its historical volatility, Ford Motor is 1.02 times less risky than Apetit Oyj. It trades about 0.13 of its potential returns per unit of risk. Apetit Oyj is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,355  in Apetit Oyj on October 24, 2024 and sell it today you would earn a total of  40.00  from holding Apetit Oyj or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Ford Motor  vs.  Apetit Oyj

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.

Apetit Oyj

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apetit Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Apetit Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Apetit Oyj

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

The idea behind Ford Motor and Apetit Oyj 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.