Correlation Between Aptiv PLC and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and Compagnie Plastic 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 Aptiv PLC and Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Compagnie Plastic Omnium, you can compare the effects of market volatilities on Aptiv PLC and Compagnie Plastic 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 Aptiv PLC with a short position of Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Compagnie Plastic.
Diversification Opportunities for Aptiv PLC and Compagnie Plastic
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aptiv and Compagnie is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium and Aptiv 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 Aptiv PLC are associated (or correlated) with Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Aptiv PLC and Compagnie Plastic
Assuming the 90 days horizon Aptiv PLC is expected to generate 0.77 times more return on investment than Compagnie Plastic. However, Aptiv PLC is 1.29 times less risky than Compagnie Plastic. It trades about 0.24 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about 0.15 per unit of risk. If you would invest 5,487 in Aptiv PLC on November 4, 2024 and sell it today you would earn a total of 513.00 from holding Aptiv PLC or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| Aptiv PLC |
| Compagnie Plastic Omnium |
Aptiv PLC and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Compagnie Plastic
The main advantage of trading using opposite Aptiv PLC and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.| Aptiv PLC vs. CarsalesCom | Aptiv PLC vs. BOS BETTER ONLINE | Aptiv PLC vs. GungHo Online Entertainment | Aptiv PLC vs. PREMIER FOODS |
| Compagnie Plastic vs. Teradata Corp | Compagnie Plastic vs. National Beverage Corp | Compagnie Plastic vs. BOSTON BEER A | Compagnie Plastic vs. TERADATA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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