Correlation Between Ford and Kairous Acquisition

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

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

Diversification Opportunities for Ford and Kairous Acquisition

-0.05

Correlation Coefficient

Ford  Kairous Acquisition

Good diversification

The 3 months correlation between Ford and Kairous is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Kairous Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kairous Acquisition Corp 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 Kairous Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kairous Acquisition Corp has no effect on the direction of Ford i.e., Ford and Kairous Acquisition go up and down completely randomly.

Pair Corralation between Ford and Kairous Acquisition

Taking into account the 90-day investment horizon Ford is expected to generate 6674.58 times less return on investment than Kairous Acquisition. But when comparing it to its historical volatility, Ford Motor is 75.75 times less risky than Kairous Acquisition. It trades about 0.0 of its potential returns per unit of risk. Kairous Acquisition Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Kairous Acquisition Corp on October 12, 2024 and sell it today you would lose (12.99) from holding Kairous Acquisition Corp or give up 64.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.49%
Values	Daily Returns

Ford Motor  vs.  Kairous Acquisition Corp

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 abnormal 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.

Kairous Acquisition Corp

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Kairous Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively abnormal essential indicators, Kairous Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Kairous Acquisition

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

The idea behind Ford Motor and Kairous Acquisition Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.