Correlation Between Ford and SLC Agrcola

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

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

Diversification Opportunities for Ford and SLC Agrcola

-0.23

Correlation Coefficient

Ford  SLC Agrcola

Very good diversification

The 3 months correlation between Ford and SLC is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SLC Agrcola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLC Agrcola SA 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 SLC Agrcola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLC Agrcola SA has no effect on the direction of Ford i.e., Ford and SLC Agrcola go up and down completely randomly.

Pair Corralation between Ford and SLC Agrcola

Taking into account the 90-day investment horizon Ford is expected to generate 2.47 times less return on investment than SLC Agrcola. In addition to that, Ford is 1.31 times more volatile than SLC Agrcola SA. It trades about 0.02 of its total potential returns per unit of risk. SLC Agrcola SA is currently generating about 0.08 per unit of volatility. If you would invest  1,755  in SLC Agrcola SA on September 5, 2024 and sell it today you would earn a total of  122.00  from holding SLC Agrcola SA or generate 6.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ford Motor  vs.  SLC Agrcola SA

Ford Motor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) 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.

SLC Agrcola SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SLC Agrcola SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SLC Agrcola may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ford and SLC Agrcola

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

The idea behind Ford Motor and SLC Agrcola SA 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.