Correlation Between Adient PLC and China Gas

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

By analyzing existing cross correlation between Adient PLC and China Gas Holdings, you can compare the effects of market volatilities on Adient PLC and China Gas 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 China Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and China Gas.

Diversification Opportunities for Adient PLC and China Gas

0.15

Correlation Coefficient

Adient PLC  China Gas

Average diversification

The 3 months correlation between Adient and China is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and China Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Gas Holdings 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 China Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Gas Holdings has no effect on the direction of Adient PLC i.e., Adient PLC and China Gas go up and down completely randomly.

Pair Corralation between Adient PLC and China Gas

Given the investment horizon of 90 days Adient PLC is expected to under-perform the China Gas. In addition to that, Adient PLC is 2.79 times more volatile than China Gas Holdings. It trades about -0.25 of its total potential returns per unit of risk. China Gas Holdings is currently generating about -0.22 per unit of volatility. If you would invest  85.00  in China Gas Holdings on October 10, 2024 and sell it today you would lose (3.00) from holding China Gas Holdings or give up 3.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Adient PLC  vs.  China Gas Holdings

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

China Gas Holdings

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days China Gas Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Adient PLC and China Gas

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

The idea behind Adient PLC and China Gas Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.