Correlation Between Ford and Concurrent Technologies

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

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

Diversification Opportunities for Ford and Concurrent Technologies

-0.4

Correlation Coefficient

Ford  Concurrent Technologies

Very good diversification

The 3 months correlation between Ford and Concurrent is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Concurrent Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concurrent Technologies 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 Concurrent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concurrent Technologies has no effect on the direction of Ford i.e., Ford and Concurrent Technologies go up and down completely randomly.

Pair Corralation between Ford and Concurrent Technologies

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.97 times more return on investment than Concurrent Technologies. However, Ford Motor is 1.03 times less risky than Concurrent Technologies. It trades about -0.06 of its potential returns per unit of risk. Concurrent Technologies Plc is currently generating about -0.21 per unit of risk. If you would invest  976.00  in Ford Motor on November 29, 2024 and sell it today you would lose (29.00) from holding Ford Motor or give up 2.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Ford Motor  vs.  Concurrent Technologies Plc

Ford Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Concurrent Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Concurrent Technologies Plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Concurrent Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Concurrent Technologies

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

The idea behind Ford Motor and Concurrent Technologies Plc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.