Correlation Between Autoliv and ECARX Holdings
Can any of the company-specific risk be diversified away by investing in both Autoliv and ECARX Holdings 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 Autoliv and ECARX Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autoliv and ECARX Holdings Warrants, you can compare the effects of market volatilities on Autoliv and ECARX Holdings 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 ECARX Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and ECARX Holdings.
Diversification Opportunities for Autoliv and ECARX Holdings
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Autoliv and ECARX is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and ECARX Holdings Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECARX Holdings Warrants 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 ECARX Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECARX Holdings Warrants has no effect on the direction of Autoliv i.e., Autoliv and ECARX Holdings go up and down completely randomly.
Pair Corralation between Autoliv and ECARX Holdings
Considering the 90-day investment horizon Autoliv is expected to generate 235.09 times less return on investment than ECARX Holdings. But when comparing it to its historical volatility, Autoliv is 64.41 times less risky than ECARX Holdings. It trades about 0.03 of its potential returns per unit of risk. ECARX Holdings Warrants is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8.16 in ECARX Holdings Warrants on September 2, 2024 and sell it today you would lose (5.67) from holding ECARX Holdings Warrants or give up 69.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 61.56% |
| Values | Daily Returns |
Autoliv vs. ECARX Holdings Warrants
Performance |
| Timeline |
| Autoliv |
| ECARX Holdings Warrants |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Autoliv and ECARX Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autoliv and ECARX Holdings
The main advantage of trading using opposite Autoliv and ECARX Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv position performs unexpectedly, ECARX Holdings 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 ECARX Holdings will offset losses from the drop in ECARX Holdings' long position.The idea behind Autoliv and ECARX Holdings Warrants 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.| ECARX Holdings vs. ECARX Holdings Class | ECARX Holdings vs. Bridger Aerospace Group | ECARX Holdings vs. NewAmsterdam Pharma | ECARX Holdings vs. Gorilla Technology Group |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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