Correlation Between Aptiv PLC and Stanley Electric

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

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

Diversification Opportunities for Aptiv PLC and Stanley Electric

0.11

Correlation Coefficient

Aptiv PLC  Stanley Electric

Average diversification

The 3 months correlation between Aptiv and Stanley is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Stanley Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Electric 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 Stanley Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Electric has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Stanley Electric go up and down completely randomly.

Pair Corralation between Aptiv PLC and Stanley Electric

Assuming the 90 days horizon Aptiv PLC is expected to generate 0.68 times more return on investment than Stanley Electric. However, Aptiv PLC is 1.48 times less risky than Stanley Electric. It trades about 0.66 of its potential returns per unit of risk. Stanley Electric Co is currently generating about -0.03 per unit of risk. If you would invest  5,650  in Aptiv PLC on December 4, 2024 and sell it today you would earn a total of  700.00  from holding Aptiv PLC or generate 12.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

Aptiv PLC  vs.  Stanley Electric Co

Aptiv PLC

Risk-Adjusted Performance

Solid

Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Aptiv PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Stanley Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stanley Electric Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Stanley Electric 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 Stanley Electric

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

The idea behind Aptiv PLC and Stanley Electric Co 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 CEOs Directory module to screen CEOs from public companies around the world.