Correlation Between Aptiv PLC and Sanyo Special

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

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

Diversification Opportunities for Aptiv PLC and Sanyo Special

-0.4

Correlation Coefficient

Aptiv PLC  Sanyo Special

Very good diversification

The 3 months correlation between Aptiv and Sanyo is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Sanyo Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Special Steel 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 Sanyo Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Special Steel has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Sanyo Special go up and down completely randomly.

Pair Corralation between Aptiv PLC and Sanyo Special

Given the investment horizon of 90 days Aptiv PLC is expected to under-perform the Sanyo Special. In addition to that, Aptiv PLC is 34.59 times more volatile than Sanyo Special Steel. It trades about -0.03 of its total potential returns per unit of risk. Sanyo Special Steel is currently generating about 0.06 per unit of volatility. If you would invest  1,811  in Sanyo Special Steel on September 28, 2024 and sell it today you would earn a total of  36.00  from holding Sanyo Special Steel or generate 1.99% return on investment over 90 days.

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

Aptiv PLC  vs.  Sanyo Special Steel

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 unfluctuating 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.

Sanyo Special Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanyo Special Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Sanyo Special is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aptiv PLC and Sanyo Special

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

The idea behind Aptiv PLC and Sanyo Special Steel 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.