Correlation Between China XD and Adient PLC

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

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

Diversification Opportunities for China XD and Adient PLC

-0.26

Correlation Coefficient

China XD  Adient PLC

Very good diversification

The 3 months correlation between China and Adient is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding China XD Plastics and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC and China XD 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 China XD Plastics 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 China XD i.e., China XD and Adient PLC go up and down completely randomly.

Pair Corralation between China XD and Adient PLC

If you would invest  0.24  in China XD Plastics on January 26, 2024 and sell it today you would earn a total of  0.00  from holding China XD Plastics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

China XD Plastics  vs.  Adient PLC

China XD Plastics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China XD Plastics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, China XD is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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

Pair Trading with China XD and Adient PLC

The main advantage of trading using opposite China XD and Adient PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China XD 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 China XD Plastics 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.