Correlation Between Ford and Inpost SA

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

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

Diversification Opportunities for Ford and Inpost SA

0.48

Correlation Coefficient

Ford  Inpost SA

Very weak diversification

The 3 months correlation between Ford and Inpost is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Inpost SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpost SA 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 Inpost SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpost SA has no effect on the direction of Ford i.e., Ford and Inpost SA go up and down completely randomly.

Pair Corralation between Ford and Inpost SA

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Inpost SA. In addition to that, Ford is 1.71 times more volatile than Inpost SA. It trades about -0.2 of its total potential returns per unit of risk. Inpost SA is currently generating about 0.01 per unit of volatility. If you would invest  1,660  in Inpost SA on October 7, 2024 and sell it today you would earn a total of  2.00  from holding Inpost SA or generate 0.12% return on investment over 90 days.

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

Ford Motor  vs.  Inpost SA

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.

Inpost SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inpost SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Inpost SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Inpost SA

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

The idea behind Ford Motor and Inpost SA 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.