Correlation Between Codere Online and Adient PLC

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

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

Diversification Opportunities for Codere Online and Adient PLC

-0.67

Correlation Coefficient

Codere Online  Adient PLC

Excellent diversification

The 3 months correlation between Codere and Adient is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Codere Online Luxembourg and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC and Codere Online 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 Codere Online Luxembourg are associated (or correlated) with Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of Codere Online i.e., Codere Online and Adient PLC go up and down completely randomly.

Pair Corralation between Codere Online and Adient PLC

Assuming the 90 days horizon Codere Online Luxembourg is expected to generate 35.22 times more return on investment than Adient PLC. However, Codere Online is 35.22 times more volatile than Adient PLC. It trades about 0.11 of its potential returns per unit of risk. Adient PLC is currently generating about -0.03 per unit of risk. If you would invest  11.00  in Codere Online Luxembourg on February 26, 2024 and sell it today you would earn a total of  87.00  from holding Codere Online Luxembourg or generate 790.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	69.88%
Values	Daily Returns

Codere Online Luxembourg  vs.  Adient PLC

Codere Online Luxembourg

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Codere Online Luxembourg are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Codere Online showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Codere Online and Adient PLC

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

The idea behind Codere Online Luxembourg and Adient 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.