Correlation Between Ford and Pergamon Status

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

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

Diversification Opportunities for Ford and Pergamon Status

-0.17

Correlation Coefficient

Ford  Pergamon Status

Good diversification

The 3 months correlation between Ford and Pergamon is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pergamon Status Dis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pergamon Status Dis 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 Pergamon Status. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pergamon Status Dis has no effect on the direction of Ford i.e., Ford and Pergamon Status go up and down completely randomly.

Pair Corralation between Ford and Pergamon Status

Taking into account the 90-day investment horizon Ford is expected to generate 10.21 times less return on investment than Pergamon Status. But when comparing it to its historical volatility, Ford Motor is 1.88 times less risky than Pergamon Status. It trades about 0.01 of its potential returns per unit of risk. Pergamon Status Dis is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,505  in Pergamon Status Dis on September 23, 2024 and sell it today you would earn a total of  4,940  from holding Pergamon Status Dis or generate 140.94% 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.  Pergamon Status Dis

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 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.

Pergamon Status Dis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pergamon Status Dis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Pergamon Status is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ford and Pergamon Status

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

The idea behind Ford Motor and Pergamon Status Dis 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.