Correlation Between Stoneridge and Adient PLC

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

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

Diversification Opportunities for Stoneridge and Adient PLC

0.1

Correlation Coefficient

Stoneridge  Adient PLC

Average diversification

The 3 months correlation between Stoneridge and Adient is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Stoneridge and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC and Stoneridge 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 Stoneridge are associated (or correlated) with Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of Stoneridge i.e., Stoneridge and Adient PLC go up and down completely randomly.

Pair Corralation between Stoneridge and Adient PLC

Considering the 90-day investment horizon Stoneridge is expected to generate 1.75 times more return on investment than Adient PLC. However, Stoneridge is 1.75 times more volatile than Adient PLC. It trades about -0.07 of its potential returns per unit of risk. Adient PLC is currently generating about -0.14 per unit of risk. If you would invest  629.00  in Stoneridge on December 30, 2024 and sell it today you would lose (166.00) from holding Stoneridge or give up 26.39% of portfolio value over 90 days.

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

Stoneridge  vs.  Adient PLC

Stoneridge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stoneridge has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Adient PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adient PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Stoneridge and Adient PLC

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

The idea behind Stoneridge and Adient 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.