Correlation Between Ford and Powszechna Kasa

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

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

Diversification Opportunities for Ford and Powszechna Kasa

0.05

Correlation Coefficient

Ford  Powszechna Kasa

Significant diversification

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

Pair Corralation between Ford and Powszechna Kasa

Taking into account the 90-day investment horizon Ford is expected to generate 7.39 times less return on investment than Powszechna Kasa. But when comparing it to its historical volatility, Ford Motor is 2.07 times less risky than Powszechna Kasa. It trades about 0.05 of its potential returns per unit of risk. Powszechna Kasa Oszczednosci is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,398  in Powszechna Kasa Oszczednosci on December 20, 2024 and sell it today you would earn a total of  623.00  from holding Powszechna Kasa Oszczednosci or generate 44.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Powszechna Kasa Oszczednosci

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 3 (%) 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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Powszechna Kasa Oszc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Powszechna Kasa Oszczednosci are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward-looking signals, Powszechna Kasa showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Powszechna Kasa

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

The idea behind Ford Motor and Powszechna Kasa Oszczednosci 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.