Correlation Between Aptiv PLC and American Healthcare

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

By analyzing existing cross correlation between Aptiv PLC and American Healthcare REIT,, you can compare the effects of market volatilities on Aptiv PLC and American Healthcare 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 Aptiv PLC with a short position of American Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and American Healthcare.

Diversification Opportunities for Aptiv PLC and American Healthcare

-0.7

Correlation Coefficient

Aptiv PLC  American Healthcare

Excellent diversification

The 3 months correlation between Aptiv and American is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and American Healthcare REIT, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Healthcare REIT, and Aptiv 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 Aptiv PLC are associated (or correlated) with American Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Healthcare REIT, has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and American Healthcare go up and down completely randomly.

Pair Corralation between Aptiv PLC and American Healthcare

Given the investment horizon of 90 days Aptiv PLC is expected to under-perform the American Healthcare. In addition to that, Aptiv PLC is 1.36 times more volatile than American Healthcare REIT,. It trades about -0.03 of its total potential returns per unit of risk. American Healthcare REIT, is currently generating about 0.23 per unit of volatility. If you would invest  1,265  in American Healthcare REIT, on September 29, 2024 and sell it today you would earn a total of  1,583  from holding American Healthcare REIT, or generate 125.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	45.36%
Values	Daily Returns

Aptiv PLC  vs.  American Healthcare REIT,

Aptiv PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

American Healthcare REIT,

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical indicators, American Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aptiv PLC and American Healthcare

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

The idea behind Aptiv PLC and American Healthcare REIT, 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.