Correlation Between JD and Aptiv PLC

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

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

Diversification Opportunities for JD and Aptiv PLC

-0.39

Correlation Coefficient

JD  Aptiv PLC

Very good diversification

The 3 months correlation between JD and Aptiv is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and JD 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 JD Inc Adr 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 JD i.e., JD and Aptiv PLC go up and down completely randomly.

Pair Corralation between JD and Aptiv PLC

Allowing for the 90-day total investment horizon JD Inc Adr is expected to generate 1.02 times more return on investment than Aptiv PLC. However, JD is 1.02 times more volatile than Aptiv PLC. It trades about 0.32 of its potential returns per unit of risk. Aptiv PLC is currently generating about 0.15 per unit of risk. If you would invest  2,594  in JD Inc Adr on February 7, 2024 and sell it today you would earn a total of  677.00  from holding JD Inc Adr or generate 26.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

JD Inc Adr  vs.  Aptiv PLC

JD Inc Adr

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, JD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aptiv PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aptiv PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Aptiv PLC is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with JD and Aptiv PLC

The main advantage of trading using opposite JD and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD 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 JD Inc Adr 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.