Correlation Between Ford and Raisio Oyj

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

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

Diversification Opportunities for Ford and Raisio Oyj

-0.06

Correlation Coefficient

Ford  Raisio Oyj

Good diversification

The 3 months correlation between Ford and Raisio is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Raisio Oyj Vaihto osake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raisio Oyj Vaihto 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 Raisio Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raisio Oyj Vaihto has no effect on the direction of Ford i.e., Ford and Raisio Oyj go up and down completely randomly.

Pair Corralation between Ford and Raisio Oyj

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Raisio Oyj. In addition to that, Ford is 1.55 times more volatile than Raisio Oyj Vaihto osake. It trades about -0.05 of its total potential returns per unit of risk. Raisio Oyj Vaihto osake is currently generating about -0.02 per unit of volatility. If you would invest  220.00  in Raisio Oyj Vaihto osake on October 22, 2024 and sell it today you would lose (5.00) from holding Raisio Oyj Vaihto osake or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Ford Motor  vs.  Raisio Oyj Vaihto osake

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 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.

Raisio Oyj Vaihto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raisio Oyj Vaihto osake has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Raisio Oyj 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 Raisio Oyj

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

The idea behind Ford Motor and Raisio Oyj Vaihto osake 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.