Correlation Between Ford and Giyani Metals

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

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

Diversification Opportunities for Ford and Giyani Metals

-0.08

Correlation Coefficient

Ford  Giyani Metals

Good diversification

The 3 months correlation between Ford and Giyani is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Giyani Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giyani Metals Corp 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 Giyani Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giyani Metals Corp has no effect on the direction of Ford i.e., Ford and Giyani Metals go up and down completely randomly.

Pair Corralation between Ford and Giyani Metals

Taking into account the 90-day investment horizon Ford is expected to generate 10.25 times less return on investment than Giyani Metals. But when comparing it to its historical volatility, Ford Motor is 3.5 times less risky than Giyani Metals. It trades about 0.01 of its potential returns per unit of risk. Giyani Metals Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Giyani Metals Corp on September 3, 2024 and sell it today you would lose (4.00) from holding Giyani Metals Corp or give up 36.36% of portfolio value over 90 days.

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

Ford Motor  vs.  Giyani Metals Corp

Ford Motor

Risk-Adjusted Performance

1 of 100

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.

Giyani Metals Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Giyani Metals Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Giyani Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Giyani Metals

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

The idea behind Ford Motor and Giyani Metals Corp 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.