Correlation Between Compagnie Generale and Aptiv PLC

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

By analyzing existing cross correlation between Compagnie Generale des and Aptiv PLC, you can compare the effects of market volatilities on Compagnie Generale and Aptiv PLC 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 Compagnie Generale with a short position of Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Generale and Aptiv PLC.

Diversification Opportunities for Compagnie Generale and Aptiv PLC

0.82

Correlation Coefficient

Compagnie Generale  Aptiv PLC

Very poor diversification

The 3 months correlation between Compagnie and Aptiv is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Generale des and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and Compagnie Generale 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 Compagnie Generale des are associated (or correlated) with Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Compagnie Generale i.e., Compagnie Generale and Aptiv PLC go up and down completely randomly.

Pair Corralation between Compagnie Generale and Aptiv PLC

Assuming the 90 days horizon Compagnie Generale des is expected to under-perform the Aptiv PLC. But the pink sheet apears to be less risky and, when comparing its historical volatility, Compagnie Generale des is 1.96 times less risky than Aptiv PLC. The pink sheet trades about -0.18 of its potential returns per unit of risk. The Aptiv PLC is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  6,879  in Aptiv PLC on September 15, 2024 and sell it today you would lose (1,025) from holding Aptiv PLC or give up 14.9% of portfolio value over 90 days.

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

Compagnie Generale des  vs.  Aptiv PLC

Compagnie Generale des

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Generale des has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 fragile 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.

Pair Trading with Compagnie Generale and Aptiv PLC

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

The idea behind Compagnie Generale des and Aptiv PLC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.