Correlation Between Ford and Hensel Davest

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

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

Diversification Opportunities for Ford and Hensel Davest

0.16

Correlation Coefficient

Ford  Hensel Davest

Average diversification

The 3 months correlation between Ford and Hensel is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hensel Davest Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hensel Davest Indonesia 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 Hensel Davest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hensel Davest Indonesia has no effect on the direction of Ford i.e., Ford and Hensel Davest go up and down completely randomly.

Pair Corralation between Ford and Hensel Davest

Taking into account the 90-day investment horizon Ford is expected to generate 3.62 times less return on investment than Hensel Davest. But when comparing it to its historical volatility, Ford Motor is 3.04 times less risky than Hensel Davest. It trades about 0.04 of its potential returns per unit of risk. Hensel Davest Indonesia is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,900  in Hensel Davest Indonesia on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Hensel Davest Indonesia or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Ford Motor  vs.  Hensel Davest Indonesia

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.

Hensel Davest Indonesia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hensel Davest Indonesia are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Hensel Davest disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Hensel Davest

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

The idea behind Ford Motor and Hensel Davest Indonesia 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.