Correlation Between ABB and Autoliv
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By analyzing existing cross correlation between ABB and Autoliv, you can compare the effects of market volatilities on ABB and Autoliv 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 ABB with a short position of Autoliv. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABB and Autoliv.
Diversification Opportunities for ABB and Autoliv
Poor diversification
The 3 months correlation between ABB and Autoliv is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ABB and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and ABB 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 ABB are associated (or correlated) with Autoliv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoliv has no effect on the direction of ABB i.e., ABB and Autoliv go up and down completely randomly.
Pair Corralation between ABB and Autoliv
Assuming the 90 days trading horizon ABB is expected to generate 1.09 times more return on investment than Autoliv. However, ABB is 1.09 times more volatile than Autoliv. It trades about 0.32 of its potential returns per unit of risk. Autoliv is currently generating about 0.32 per unit of risk. If you would invest 60,460 in ABB on October 28, 2024 and sell it today you would earn a total of 4,600 from holding ABB or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABB vs. Autoliv
Performance |
| Timeline |
| ABB |
| Autoliv |
ABB and Autoliv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABB and Autoliv
The main advantage of trading using opposite ABB and Autoliv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABB position performs unexpectedly, Autoliv 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 Autoliv will offset losses from the drop in Autoliv's long position.The idea behind ABB and Autoliv 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.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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