Correlation Between Adient PLC and 373334KR1

Can any of the company-specific risk be diversified away by investing in both Adient PLC and 373334KR1 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 Adient PLC and 373334KR1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adient PLC and SO 5125 15 MAY 52, you can compare the effects of market volatilities on Adient PLC and 373334KR1 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 Adient PLC with a short position of 373334KR1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and 373334KR1.

Diversification Opportunities for Adient PLC and 373334KR1

0.25

Correlation Coefficient

Adient PLC  373334KR1

Modest diversification

The 3 months correlation between Adient and 373334KR1 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and SO 5125 15 MAY 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SO 5125 15 and Adient PLC 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 Adient PLC are associated (or correlated) with 373334KR1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SO 5125 15 has no effect on the direction of Adient PLC i.e., Adient PLC and 373334KR1 go up and down completely randomly.

Pair Corralation between Adient PLC and 373334KR1

Given the investment horizon of 90 days Adient PLC is expected to generate 3.12 times more return on investment than 373334KR1. However, Adient PLC is 3.12 times more volatile than SO 5125 15 MAY 52. It trades about -0.03 of its potential returns per unit of risk. SO 5125 15 MAY 52 is currently generating about -0.11 per unit of risk. If you would invest  2,046  in Adient PLC on September 15, 2024 and sell it today you would lose (150.00) from holding Adient PLC or give up 7.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Adient PLC  vs.  SO 5125 15 MAY 52

Adient PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adient PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Adient PLC is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SO 5125 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SO 5125 15 MAY 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 373334KR1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Adient PLC and 373334KR1

The main advantage of trading using opposite Adient PLC and 373334KR1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC position performs unexpectedly, 373334KR1 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 373334KR1 will offset losses from the drop in 373334KR1's long position.

The idea behind Adient PLC and SO 5125 15 MAY 52 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.