Correlation Between Ford and Intraco Penta

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

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

Diversification Opportunities for Ford and Intraco Penta

-0.34

Correlation Coefficient

Ford  Intraco Penta

Very good diversification

The 3 months correlation between Ford and Intraco is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Intraco Penta Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intraco Penta Tbk 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 Intraco Penta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intraco Penta Tbk has no effect on the direction of Ford i.e., Ford and Intraco Penta go up and down completely randomly.

Pair Corralation between Ford and Intraco Penta

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Intraco Penta. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 3.1 times less risky than Intraco Penta. The stock trades about -0.18 of its potential returns per unit of risk. The Intraco Penta Tbk is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Intraco Penta Tbk on September 15, 2024 and sell it today you would earn a total of  100.00  from holding Intraco Penta Tbk or generate 8.33% 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.  Intraco Penta Tbk

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.

Intraco Penta Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intraco Penta Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Ford and Intraco Penta

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

The idea behind Ford Motor and Intraco Penta Tbk 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.