Correlation Between Ford and PT Gajah

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

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

Diversification Opportunities for Ford and PT Gajah

0.03

Correlation Coefficient

Ford  PT Gajah

Significant diversification

The 3 months correlation between Ford and GH8 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PT Gajah Tunggal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Gajah Tunggal 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 PT Gajah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Gajah Tunggal has no effect on the direction of Ford i.e., Ford and PT Gajah go up and down completely randomly.

Pair Corralation between Ford and PT Gajah

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.29 times more return on investment than PT Gajah. However, Ford Motor is 3.48 times less risky than PT Gajah. It trades about 0.01 of its potential returns per unit of risk. PT Gajah Tunggal is currently generating about 0.0 per unit of risk. If you would invest  967.00  in Ford Motor on December 16, 2024 and sell it today you would earn a total of  6.00  from holding Ford Motor or generate 0.62% return on investment over 90 days.

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

Ford Motor  vs.  PT Gajah Tunggal

Ford Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) 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.

PT Gajah Tunggal

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ford and PT Gajah

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

The idea behind Ford Motor and PT Gajah Tunggal 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.