Correlation Between Ford and Mingteng International

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

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

Diversification Opportunities for Ford and Mingteng International

0.25

Correlation Coefficient

Ford  Mingteng International

Modest diversification

The 3 months correlation between Ford and Mingteng is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mingteng International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingteng International 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 Mingteng International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mingteng International has no effect on the direction of Ford i.e., Ford and Mingteng International go up and down completely randomly.

Pair Corralation between Ford and Mingteng International

Taking into account the 90-day investment horizon Ford is expected to generate 11.71 times less return on investment than Mingteng International. But when comparing it to its historical volatility, Ford Motor is 3.44 times less risky than Mingteng International. It trades about 0.02 of its potential returns per unit of risk. Mingteng International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  350.00  in Mingteng International on September 4, 2024 and sell it today you would earn a total of  216.00  from holding Mingteng International or generate 61.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	64.63%
Values	Daily Returns

Ford Motor  vs.  Mingteng International

Ford Motor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Mingteng International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mingteng International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Mingteng International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Mingteng International

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

The idea behind Ford Motor and Mingteng International 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.