Correlation Between Ford and Shigan Quantum

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

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

Diversification Opportunities for Ford and Shigan Quantum

0.42

Correlation Coefficient

Ford  Shigan Quantum

Very weak diversification

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

Pair Corralation between Ford and Shigan Quantum

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Shigan Quantum. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.27 times less risky than Shigan Quantum. The stock trades about -0.22 of its potential returns per unit of risk. The Shigan Quantum Tech is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  11,990  in Shigan Quantum Tech on October 8, 2024 and sell it today you would lose (490.00) from holding Shigan Quantum Tech or give up 4.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.47%
Values	Daily Returns

Ford Motor  vs.  Shigan Quantum Tech

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.

Shigan Quantum Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shigan Quantum Tech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shigan Quantum is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Shigan Quantum

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

The idea behind Ford Motor and Shigan Quantum Tech 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.