Correlation Between Ford and Steady Safe

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

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

Diversification Opportunities for Ford and Steady Safe

-0.42

Correlation Coefficient

Ford  Steady Safe

Very good diversification

The 3 months correlation between Ford and Steady is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Steady Safe TBK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steady Safe TBK 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 Steady Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steady Safe TBK has no effect on the direction of Ford i.e., Ford and Steady Safe go up and down completely randomly.

Pair Corralation between Ford and Steady Safe

Taking into account the 90-day investment horizon Ford is expected to generate 5.16 times less return on investment than Steady Safe. But when comparing it to its historical volatility, Ford Motor is 4.14 times less risky than Steady Safe. It trades about 0.03 of its potential returns per unit of risk. Steady Safe TBK is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  22,600  in Steady Safe TBK on December 27, 2024 and sell it today you would lose (800.00) from holding Steady Safe TBK or give up 3.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Ford Motor  vs.  Steady Safe TBK

Ford Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) 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.

Steady Safe TBK

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steady Safe TBK are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Steady Safe disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Steady Safe

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

The idea behind Ford Motor and Steady Safe TBK 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.