Correlation Between Ford and Sido Muncul

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

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

Diversification Opportunities for Ford and Sido Muncul

-0.44

Correlation Coefficient

Ford  Sido Muncul

Very good diversification

The 3 months correlation between Ford and Sido is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sido Muncul PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sido Muncul PT 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 Sido Muncul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sido Muncul PT has no effect on the direction of Ford i.e., Ford and Sido Muncul go up and down completely randomly.

Pair Corralation between Ford and Sido Muncul

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.0 times more return on investment than Sido Muncul. However, Ford is 1.0 times more volatile than Sido Muncul PT. It trades about 0.06 of its potential returns per unit of risk. Sido Muncul PT is currently generating about -0.01 per unit of risk. If you would invest  971.00  in Ford Motor on December 27, 2024 and sell it today you would earn a total of  58.00  from holding Ford Motor or generate 5.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Ford Motor  vs.  Sido Muncul PT

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sido Muncul PT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sido Muncul PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sido Muncul is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ford and Sido Muncul

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

The idea behind Ford Motor and Sido Muncul PT 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.