Correlation Between AMA Group and Autoliv
Can any of the company-specific risk be diversified away by investing in both AMA Group and Autoliv 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 AMA Group and Autoliv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMA Group Limited and Autoliv, you can compare the effects of market volatilities on AMA Group 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 AMA Group with a short position of Autoliv. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMA Group and Autoliv.
Diversification Opportunities for AMA Group and Autoliv
Weak diversification
The 3 months correlation between AMA and Autoliv is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding AMA Group Limited and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and AMA Group 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 AMA Group Limited 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 AMA Group i.e., AMA Group and Autoliv go up and down completely randomly.
Pair Corralation between AMA Group and Autoliv
Assuming the 90 days horizon AMA Group Limited is expected to generate 31.26 times more return on investment than Autoliv. However, AMA Group is 31.26 times more volatile than Autoliv. It trades about 0.07 of its potential returns per unit of risk. Autoliv is currently generating about 0.05 per unit of risk. If you would invest 15.00 in AMA Group Limited on September 12, 2024 and sell it today you would lose (10.25) from holding AMA Group Limited or give up 68.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
AMA Group Limited vs. Autoliv
Performance |
| Timeline |
| AMA Group Limited |
| Autoliv |
AMA Group and Autoliv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMA Group and Autoliv
The main advantage of trading using opposite AMA Group and Autoliv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMA Group 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.| AMA Group vs. Adient PLC | AMA Group vs. Lear Corporation | AMA Group vs. Autoliv | AMA Group vs. American Axle Manufacturing |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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