Correlation Between Adient PLC and Gentex

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

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

Diversification Opportunities for Adient PLC and Gentex

0.37

Correlation Coefficient

Adient PLC  Gentex

Weak diversification

The 3 months correlation between Adient and Gentex is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Adient PLC i.e., Adient PLC and Gentex go up and down completely randomly.

Pair Corralation between Adient PLC and Gentex

Given the investment horizon of 90 days Adient PLC is expected to generate 2.14 times more return on investment than Gentex. However, Adient PLC is 2.14 times more volatile than Gentex. It trades about -0.09 of its potential returns per unit of risk. Gentex is currently generating about -0.21 per unit of risk. If you would invest  3,183  in Adient PLC on February 3, 2024 and sell it today you would lose (161.00) from holding Adient PLC or give up 5.06% of portfolio value over 90 days.

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

Adient PLC  vs.  Gentex

Adient PLC

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Gentex

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Gentex is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Adient PLC and Gentex

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

The idea behind Adient PLC and Gentex 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.