Correlation Between Adient PLC and Marine Products

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Can any of the company-specific risk be diversified away by investing in both Adient PLC and Marine Products 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 Marine Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adient PLC and Marine Products, you can compare the effects of market volatilities on Adient PLC and Marine Products 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 Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and Marine Products.

Diversification Opportunities for Adient PLC and Marine Products

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Adient and Marine is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Adient PLC i.e., Adient PLC and Marine Products go up and down completely randomly.

Pair Corralation between Adient PLC and Marine Products

Given the investment horizon of 90 days Adient PLC is expected to under-perform the Marine Products. In addition to that, Adient PLC is 1.08 times more volatile than Marine Products. It trades about -0.12 of its total potential returns per unit of risk. Marine Products is currently generating about 0.01 per unit of volatility. If you would invest  1,002  in Marine Products on September 1, 2024 and sell it today you would lose (13.00) from holding Marine Products or give up 1.3% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Adient PLC  vs.  Marine Products

 Performance 
       Timeline  
Adient PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Marine Products 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Marine Products are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Marine Products may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Adient PLC and Marine Products Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Adient PLC and Marine Products

The main advantage of trading using opposite Adient PLC and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' long position.
The idea behind Adient PLC and Marine Products 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.
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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