Correlation Between Ford and Golden Heaven

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

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

Diversification Opportunities for Ford and Golden Heaven

-0.38

Correlation Coefficient

Ford  Golden Heaven

Very good diversification

The 3 months correlation between Ford and Golden is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Golden Heaven Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Heaven Group 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 Golden Heaven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Heaven Group has no effect on the direction of Ford i.e., Ford and Golden Heaven go up and down completely randomly.

Pair Corralation between Ford and Golden Heaven

Taking into account the 90-day investment horizon Ford is expected to generate 4.78 times less return on investment than Golden Heaven. But when comparing it to its historical volatility, Ford Motor is 3.88 times less risky than Golden Heaven. It trades about 0.19 of its potential returns per unit of risk. Golden Heaven Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  189.00  in Golden Heaven Group on October 20, 2024 and sell it today you would earn a total of  41.00  from holding Golden Heaven Group or generate 21.69% return on investment over 90 days.

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

Ford Motor  vs.  Golden Heaven Group

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.

Golden Heaven Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Heaven Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Golden Heaven is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ford and Golden Heaven

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

The idea behind Ford Motor and Golden Heaven Group 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.