Correlation Between Autoliv and AB SKF
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By analyzing existing cross correlation between Autoliv and AB SKF, you can compare the effects of market volatilities on Autoliv and AB SKF 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 SKF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and AB SKF.
Diversification Opportunities for Autoliv and AB SKF
Very weak diversification
The 3 months correlation between Autoliv and SKF-B is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and AB SKF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB SKF 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 SKF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB SKF has no effect on the direction of Autoliv i.e., Autoliv and AB SKF go up and down completely randomly.
Pair Corralation between Autoliv and AB SKF
Assuming the 90 days trading horizon Autoliv is expected to under-perform the AB SKF. In addition to that, Autoliv is 1.13 times more volatile than AB SKF. It trades about -0.01 of its total potential returns per unit of risk. AB SKF is currently generating about -0.01 per unit of volatility. If you would invest 21,649 in AB SKF on August 25, 2024 and sell it today you would lose (869.00) from holding AB SKF or give up 4.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autoliv vs. AB SKF
Performance |
| Timeline |
| Autoliv |
| AB SKF |
Autoliv and AB SKF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autoliv and AB SKF
The main advantage of trading using opposite Autoliv and AB SKF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv position performs unexpectedly, AB SKF 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 SKF will offset losses from the drop in AB SKF's long position.The idea behind Autoliv and AB SKF 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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