Correlation Between Ford and Martifer SGPS

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

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

Diversification Opportunities for Ford and Martifer SGPS

-0.45

Correlation Coefficient

Ford  Martifer SGPS

Very good diversification

The 3 months correlation between Ford and Martifer is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Martifer SGPS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martifer SGPS 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 Martifer SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martifer SGPS SA has no effect on the direction of Ford i.e., Ford and Martifer SGPS go up and down completely randomly.

Pair Corralation between Ford and Martifer SGPS

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Martifer SGPS. In addition to that, Ford is 1.23 times more volatile than Martifer SGPS SA. It trades about -0.09 of its total potential returns per unit of risk. Martifer SGPS SA is currently generating about 0.04 per unit of volatility. If you would invest  173.00  in Martifer SGPS SA on December 2, 2024 and sell it today you would earn a total of  6.00  from holding Martifer SGPS SA or generate 3.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Ford Motor  vs.  Martifer SGPS SA

Ford Motor

Risk-Adjusted Performance

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.

Martifer SGPS SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Martifer SGPS SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Martifer SGPS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ford and Martifer SGPS

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

The idea behind Ford Motor and Martifer SGPS 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.