Correlation Between Ford and Hoang Huy

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

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

Diversification Opportunities for Ford and Hoang Huy

0.22

Correlation Coefficient

Ford  Hoang Huy

Modest diversification

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

Pair Corralation between Ford and Hoang Huy

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.87 times more return on investment than Hoang Huy. However, Ford Motor is 1.15 times less risky than Hoang Huy. It trades about -0.14 of its potential returns per unit of risk. Hoang Huy Investment is currently generating about -0.21 per unit of risk. If you would invest  999.00  in Ford Motor on October 15, 2024 and sell it today you would lose (34.00) from holding Ford Motor or give up 3.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Ford Motor  vs.  Hoang Huy Investment

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hoang Huy Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hoang Huy Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hoang Huy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ford and Hoang Huy

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

The idea behind Ford Motor and Hoang Huy Investment 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.