Correlation Between Aptiv PLC and Continental Aktiengesellscha

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

By analyzing existing cross correlation between Aptiv PLC and Continental Aktiengesellschaft, you can compare the effects of market volatilities on Aptiv PLC and Continental Aktiengesellscha 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 Continental Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Continental Aktiengesellscha.

Diversification Opportunities for Aptiv PLC and Continental Aktiengesellscha

-0.49

Correlation Coefficient

Aptiv PLC  Continental Aktiengesellscha

Very good diversification

The 3 months correlation between Aptiv and Continental is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha 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 Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Continental Aktiengesellscha go up and down completely randomly.

Pair Corralation between Aptiv PLC and Continental Aktiengesellscha

Assuming the 90 days horizon Aptiv PLC is expected to under-perform the Continental Aktiengesellscha. In addition to that, Aptiv PLC is 1.17 times more volatile than Continental Aktiengesellschaft. It trades about -0.08 of its total potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about 0.09 per unit of volatility. If you would invest  5,794  in Continental Aktiengesellschaft on October 1, 2024 and sell it today you would earn a total of  674.00  from holding Continental Aktiengesellschaft or generate 11.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Aptiv PLC  vs.  Continental Aktiengesellschaft

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Continental Aktiengesellscha

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Aktiengesellschaft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Continental Aktiengesellscha reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptiv PLC and Continental Aktiengesellscha

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

The idea behind Aptiv PLC and Continental Aktiengesellschaft 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.