Correlation Between Ford and Thungela Resources

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ford and Thungela Resources 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 Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Thungela Resources Limited, you can compare the effects of market volatilities on Ford and Thungela Resources 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 Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Thungela Resources.

Diversification Opportunities for Ford and Thungela Resources

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Ford and Thungela is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources 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 Thungela Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thungela Resources has no effect on the direction of Ford i.e., Ford and Thungela Resources go up and down completely randomly.

Pair Corralation between Ford and Thungela Resources

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Thungela Resources. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.9 times less risky than Thungela Resources. The stock trades about -0.27 of its potential returns per unit of risk. The Thungela Resources Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  661.00  in Thungela Resources Limited on October 10, 2024 and sell it today you would earn a total of  44.00  from holding Thungela Resources Limited or generate 6.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy80.95%
ValuesDaily Returns

Ford Motor  vs.  Thungela Resources Limited

 Performance 
       Timeline  
Ford Motor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Thungela Resources 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Thungela Resources Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Thungela Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ford and Thungela Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ford and Thungela Resources

The main advantage of trading using opposite Ford and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Thungela Resources 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 Thungela Resources will offset losses from the drop in Thungela Resources' long position.
The idea behind Ford Motor and Thungela Resources Limited 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

Other Complementary Tools

Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like