Correlation Between Aptiv PLC and KYB PORATION

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

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

Diversification Opportunities for Aptiv PLC and KYB PORATION

-0.39

Correlation Coefficient

Aptiv PLC  KYB PORATION

Very good diversification

The 3 months correlation between Aptiv and KYB is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and KYB PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYB PORATION 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 KYB PORATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYB PORATION has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and KYB PORATION go up and down completely randomly.

Pair Corralation between Aptiv PLC and KYB PORATION

Assuming the 90 days horizon Aptiv PLC is expected to under-perform the KYB PORATION. In addition to that, Aptiv PLC is 1.26 times more volatile than KYB PORATION. It trades about -0.04 of its total potential returns per unit of risk. KYB PORATION is currently generating about 0.06 per unit of volatility. If you would invest  1,170  in KYB PORATION on September 30, 2024 and sell it today you would earn a total of  590.00  from holding KYB PORATION or generate 50.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Aptiv PLC  vs.  KYB PORATION

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.

KYB PORATION

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KYB PORATION are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KYB PORATION reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptiv PLC and KYB PORATION

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

The idea behind Aptiv PLC and KYB PORATION 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.