Correlation Between Aptiv PLC and Superior Industries

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

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

Diversification Opportunities for Aptiv PLC and Superior Industries

-0.19

Correlation Coefficient

Aptiv PLC  Superior Industries

Good diversification

The 3 months correlation between Aptiv and Superior is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Superior Industries Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Industries 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 Superior Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Industries has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Superior Industries go up and down completely randomly.

Pair Corralation between Aptiv PLC and Superior Industries

Given the investment horizon of 90 days Aptiv PLC is expected to generate 3.52 times less return on investment than Superior Industries. But when comparing it to its historical volatility, Aptiv PLC is 3.07 times less risky than Superior Industries. It trades about 0.04 of its potential returns per unit of risk. Superior Industries International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Superior Industries International on December 29, 2024 and sell it today you would earn a total of  16.00  from holding Superior Industries International or generate 8.0% return on investment over 90 days.

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

Aptiv PLC  vs.  Superior Industries Internatio

Aptiv PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aptiv PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Aptiv PLC is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Superior Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Industries International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Superior Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptiv PLC and Superior Industries

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

The idea behind Aptiv PLC and Superior Industries International 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.