Correlation Between Ford and CinCor Pharma

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

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

Diversification Opportunities for Ford and CinCor Pharma

0.39

Correlation Coefficient

Ford  CinCor Pharma

Weak diversification

The 3 months correlation between Ford and CinCor is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CinCor Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CinCor Pharma 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 CinCor Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CinCor Pharma has no effect on the direction of Ford i.e., Ford and CinCor Pharma go up and down completely randomly.

Pair Corralation between Ford and CinCor Pharma

If you would invest  2,906  in CinCor Pharma on February 2, 2024 and sell it today you would earn a total of  0.00  from holding CinCor Pharma or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	2.33%
Values	Daily Returns

Ford Motor  vs.  CinCor Pharma

Ford Motor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 3 (%) 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 June 2024.

CinCor Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CinCor Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CinCor Pharma is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ford and CinCor Pharma

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

The idea behind Ford Motor and CinCor Pharma 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.