Correlation Between Ford and ANI Pharmaceuticals

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

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

Diversification Opportunities for Ford and ANI Pharmaceuticals

0.59

Correlation Coefficient

Ford  ANI Pharmaceuticals

Very weak diversification

The 3 months correlation between Ford and ANI is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ANI Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANI Pharmaceuticals 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 ANI Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANI Pharmaceuticals has no effect on the direction of Ford i.e., Ford and ANI Pharmaceuticals go up and down completely randomly.

Pair Corralation between Ford and ANI Pharmaceuticals

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the ANI Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.12 times less risky than ANI Pharmaceuticals. The stock trades about -0.34 of its potential returns per unit of risk. The ANI Pharmaceuticals is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest  5,500  in ANI Pharmaceuticals on September 28, 2024 and sell it today you would lose (400.00) from holding ANI Pharmaceuticals or give up 7.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Ford Motor  vs.  ANI Pharmaceuticals

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.

ANI Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANI Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ANI Pharmaceuticals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ford and ANI Pharmaceuticals

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

The idea behind Ford Motor and ANI Pharmaceuticals 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .