Correlation Between Adient PLC and AMA Group
Can any of the company-specific risk be diversified away by investing in both Adient PLC and AMA Group 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 Adient PLC and AMA Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adient PLC and AMA Group Limited, you can compare the effects of market volatilities on Adient PLC and AMA Group 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 Adient PLC with a short position of AMA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and AMA Group.
Diversification Opportunities for Adient PLC and AMA Group
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adient and AMA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and AMA Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMA Group Limited and Adient 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 Adient PLC are associated (or correlated) with AMA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMA Group Limited has no effect on the direction of Adient PLC i.e., Adient PLC and AMA Group go up and down completely randomly.
Pair Corralation between Adient PLC and AMA Group
Given the investment horizon of 90 days Adient PLC is expected to under-perform the AMA Group. But the stock apears to be less risky and, when comparing its historical volatility, Adient PLC is 24.42 times less risky than AMA Group. The stock trades about -0.04 of its potential returns per unit of risk. The AMA Group Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 15.00 in AMA Group Limited on September 4, 2024 and sell it today you would lose (10.25) from holding AMA Group Limited or give up 68.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adient PLC vs. AMA Group Limited
Performance |
| Timeline |
| Adient PLC |
| AMA Group Limited |
Adient PLC and AMA Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adient PLC and AMA Group
The main advantage of trading using opposite Adient PLC and AMA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC position performs unexpectedly, AMA Group 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 AMA Group will offset losses from the drop in AMA Group's long position.| Adient PLC vs. Ford Motor | Adient PLC vs. General Motors | Adient PLC vs. Goodyear Tire Rubber | Adient PLC vs. Li Auto |
| AMA Group vs. Adient PLC | AMA Group vs. Lear Corporation | AMA Group vs. Autoliv | AMA Group vs. American Axle Manufacturing |
Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |