Correlation Between Ford and Singapore Telecommunicatio

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

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

Diversification Opportunities for Ford and Singapore Telecommunicatio

0.14

Correlation Coefficient

Ford  Singapore Telecommunicatio

Average diversification

The 3 months correlation between Ford and Singapore is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Singapore Telecommunications P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio 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 Singapore Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Telecommunicatio has no effect on the direction of Ford i.e., Ford and Singapore Telecommunicatio go up and down completely randomly.

Pair Corralation between Ford and Singapore Telecommunicatio

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Singapore Telecommunicatio. In addition to that, Ford is 1.78 times more volatile than Singapore Telecommunications PK. It trades about -0.03 of its total potential returns per unit of risk. Singapore Telecommunications PK is currently generating about 0.07 per unit of volatility. If you would invest  1,702  in Singapore Telecommunications PK on September 30, 2024 and sell it today you would earn a total of  571.00  from holding Singapore Telecommunications PK or generate 33.55% 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.  Singapore Telecommunications P

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.

Singapore Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singapore Telecommunications PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ford and Singapore Telecommunicatio

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

The idea behind Ford Motor and Singapore Telecommunications PK 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.