Correlation Between Prosiebensat and Aptiv PLC

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

By analyzing existing cross correlation between Prosiebensat 1 Media and Aptiv PLC, you can compare the effects of market volatilities on Prosiebensat 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 Prosiebensat with a short position of Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and Aptiv PLC.

Diversification Opportunities for Prosiebensat and Aptiv PLC

0.77

Correlation Coefficient

Prosiebensat  Aptiv PLC

Poor diversification

The 3 months correlation between Prosiebensat and Aptiv is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and Prosiebensat 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 Prosiebensat 1 Media 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 Prosiebensat i.e., Prosiebensat and Aptiv PLC go up and down completely randomly.

Pair Corralation between Prosiebensat and Aptiv PLC

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to generate 1.2 times more return on investment than Aptiv PLC. However, Prosiebensat is 1.2 times more volatile than Aptiv PLC. It trades about -0.03 of its potential returns per unit of risk. Aptiv PLC is currently generating about -0.04 per unit of risk. If you would invest  930.00  in Prosiebensat 1 Media on October 22, 2024 and sell it today you would lose (427.00) from holding Prosiebensat 1 Media or give up 45.91% of portfolio value over 90 days.

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

Prosiebensat 1 Media  vs.  Aptiv PLC

Prosiebensat 1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosiebensat 1 Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Prosiebensat and Aptiv PLC

The main advantage of trading using opposite Prosiebensat and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosiebensat 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 Prosiebensat 1 Media 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.