Correlation Between Ford and FIH MOBILE

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

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

Diversification Opportunities for Ford and FIH MOBILE

0.22

Correlation Coefficient

Ford  FIH MOBILE

Modest diversification

The 3 months correlation between Ford and FIH is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and FIH MOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIH MOBILE 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 FIH MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIH MOBILE has no effect on the direction of Ford i.e., Ford and FIH MOBILE go up and down completely randomly.

Pair Corralation between Ford and FIH MOBILE

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.63 times more return on investment than FIH MOBILE. However, Ford Motor is 1.59 times less risky than FIH MOBILE. It trades about 0.06 of its potential returns per unit of risk. FIH MOBILE is currently generating about 0.02 per unit of risk. If you would invest  938.00  in Ford Motor on December 18, 2024 and sell it today you would earn a total of  54.00  from holding Ford Motor or generate 5.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  FIH MOBILE

Ford Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FIH MOBILE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FIH MOBILE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, FIH MOBILE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ford and FIH MOBILE

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

The idea behind Ford Motor and FIH MOBILE 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.