Correlation Between Ford and Wattanapat Hospital

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

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

Diversification Opportunities for Ford and Wattanapat Hospital

0.73

Correlation Coefficient

Ford  Wattanapat Hospital

Poor diversification

The 3 months correlation between Ford and Wattanapat is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Wattanapat Hospital Trang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wattanapat Hospital Trang 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 Wattanapat Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wattanapat Hospital Trang has no effect on the direction of Ford i.e., Ford and Wattanapat Hospital go up and down completely randomly.

Pair Corralation between Ford and Wattanapat Hospital

Taking into account the 90-day investment horizon Ford is expected to generate 137.04 times less return on investment than Wattanapat Hospital. But when comparing it to its historical volatility, Ford Motor is 1.83 times less risky than Wattanapat Hospital. It trades about 0.0 of its potential returns per unit of risk. Wattanapat Hospital Trang is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  634.00  in Wattanapat Hospital Trang on January 17, 2024 and sell it today you would earn a total of  166.00  from holding Wattanapat Hospital Trang or generate 26.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.12%
Values	Daily Returns

Ford Motor  vs.  Wattanapat Hospital Trang

Ford Motor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Wattanapat Hospital Trang

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wattanapat Hospital Trang are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical indicators, Wattanapat Hospital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Wattanapat Hospital

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

The idea behind Ford Motor and Wattanapat Hospital Trang 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.