Correlation Between Ford and Dharma Polimetal

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

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

Diversification Opportunities for Ford and Dharma Polimetal

0.51

Correlation Coefficient

Ford  Dharma Polimetal

Very weak diversification

The 3 months correlation between Ford and Dharma is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Dharma Polimetal Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dharma Polimetal Tbk 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 Dharma Polimetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dharma Polimetal Tbk has no effect on the direction of Ford i.e., Ford and Dharma Polimetal go up and down completely randomly.

Pair Corralation between Ford and Dharma Polimetal

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.52 times more return on investment than Dharma Polimetal. However, Ford is 1.52 times more volatile than Dharma Polimetal Tbk. It trades about 0.03 of its potential returns per unit of risk. Dharma Polimetal Tbk is currently generating about 0.03 per unit of risk. If you would invest  971.00  in Ford Motor on December 27, 2024 and sell it today you would earn a total of  19.00  from holding Ford Motor or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Ford Motor  vs.  Dharma Polimetal Tbk

Ford Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) 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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Dharma Polimetal Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dharma Polimetal Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Dharma Polimetal is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ford and Dharma Polimetal

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

The idea behind Ford Motor and Dharma Polimetal Tbk 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.