Correlation Between Ford and Cyclacel Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Ford and Cyclacel 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 Cyclacel 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 Cyclacel Pharmaceuticals, you can compare the effects of market volatilities on Ford and Cyclacel 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 Cyclacel Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Cyclacel Pharmaceuticals.

Diversification Opportunities for Ford and Cyclacel Pharmaceuticals

-0.2

Correlation Coefficient

Ford  Cyclacel Pharmaceuticals

Good diversification

The 3 months correlation between Ford and Cyclacel is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Cyclacel Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclacel 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 Cyclacel Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyclacel Pharmaceuticals has no effect on the direction of Ford i.e., Ford and Cyclacel Pharmaceuticals go up and down completely randomly.

Pair Corralation between Ford and Cyclacel Pharmaceuticals

Taking into account the 90-day investment horizon Ford is expected to generate 2.94 times less return on investment than Cyclacel Pharmaceuticals. But when comparing it to its historical volatility, Ford Motor is 3.06 times less risky than Cyclacel Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Cyclacel Pharmaceuticals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,027  in Cyclacel Pharmaceuticals on September 15, 2024 and sell it today you would lose (447.00) from holding Cyclacel Pharmaceuticals or give up 43.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

Ford Motor  vs.  Cyclacel 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.

Cyclacel Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyclacel Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Preferred Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ford and Cyclacel Pharmaceuticals

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

The idea behind Ford Motor and Cyclacel 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.