Correlation Between Stoneridge and Aptiv PLC

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

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

Diversification Opportunities for Stoneridge and Aptiv PLC

0.9

Correlation Coefficient

Stoneridge  Aptiv PLC

Almost no diversification

The 3 months correlation between Stoneridge and Aptiv is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Stoneridge and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv 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 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 Stoneridge i.e., Stoneridge and Aptiv PLC go up and down completely randomly.

Pair Corralation between Stoneridge and Aptiv PLC

Considering the 90-day investment horizon Stoneridge is expected to under-perform the Aptiv PLC. In addition to that, Stoneridge is 1.36 times more volatile than Aptiv PLC. It trades about -0.12 of its total potential returns per unit of risk. Aptiv PLC is currently generating about -0.04 per unit of volatility. If you would invest  8,360  in Aptiv PLC on October 7, 2024 and sell it today you would lose (2,307) from holding Aptiv PLC or give up 27.6% of portfolio value over 90 days.

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

Stoneridge  vs.  Aptiv PLC

Stoneridge

Risk-Adjusted Performance

0 of 100

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 February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Stoneridge and Aptiv PLC

The main advantage of trading using opposite Stoneridge and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoneridge 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 Stoneridge 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 Directory module to find actively traded commodities issued by global exchanges.