Correlation Between Ford and Asuransi Kresna

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

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

Diversification Opportunities for Ford and Asuransi Kresna

0.32

Correlation Coefficient

Ford  Asuransi Kresna

Weak diversification

The 3 months correlation between Ford and Asuransi is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Asuransi Kresna Mitra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Kresna Mitra 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 Asuransi Kresna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Kresna Mitra has no effect on the direction of Ford i.e., Ford and Asuransi Kresna go up and down completely randomly.

Pair Corralation between Ford and Asuransi Kresna

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Asuransi Kresna. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.82 times less risky than Asuransi Kresna. The stock trades about -0.05 of its potential returns per unit of risk. The Asuransi Kresna Mitra is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  700.00  in Asuransi Kresna Mitra on September 29, 2024 and sell it today you would earn a total of  400.00  from holding Asuransi Kresna Mitra or generate 57.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Asuransi Kresna Mitra

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.

Asuransi Kresna Mitra

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asuransi Kresna Mitra are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Asuransi Kresna disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Asuransi Kresna

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

The idea behind Ford Motor and Asuransi Kresna Mitra 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.