Correlation Between Autoliv and AB Electrolux
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By analyzing existing cross correlation between Autoliv and AB Electrolux, you can compare the effects of market volatilities on Autoliv and AB Electrolux 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 Autoliv with a short position of AB Electrolux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and AB Electrolux.
Diversification Opportunities for Autoliv and AB Electrolux
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Autoliv and ELUX-B is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and AB Electrolux in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Electrolux and Autoliv 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 Autoliv are associated (or correlated) with AB Electrolux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Electrolux has no effect on the direction of Autoliv i.e., Autoliv and AB Electrolux go up and down completely randomly.
Pair Corralation between Autoliv and AB Electrolux
Assuming the 90 days trading horizon Autoliv is expected to generate 0.91 times more return on investment than AB Electrolux. However, Autoliv is 1.1 times less risky than AB Electrolux. It trades about -0.18 of its potential returns per unit of risk. AB Electrolux is currently generating about -0.42 per unit of risk. If you would invest 112,320 in Autoliv on November 27, 2024 and sell it today you would lose (6,800) from holding Autoliv or give up 6.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autoliv vs. AB Electrolux
Performance |
| Timeline |
| Autoliv |
| AB Electrolux |
Autoliv and AB Electrolux Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autoliv and AB Electrolux
The main advantage of trading using opposite Autoliv and AB Electrolux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv position performs unexpectedly, AB Electrolux 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 AB Electrolux will offset losses from the drop in AB Electrolux's long position.The idea behind Autoliv and AB Electrolux 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.| AB Electrolux vs. AB SKF | AB Electrolux vs. Tele2 AB | AB Electrolux vs. Sandvik AB | AB Electrolux vs. Skanska AB |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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