Correlation Between Nio and Autoliv
Can any of the company-specific risk be diversified away by investing in both Nio 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 Nio and Autoliv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nio Class A and Autoliv, you can compare the effects of market volatilities on Nio 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 Nio with a short position of Autoliv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio and Autoliv.
Diversification Opportunities for Nio and Autoliv
Pay attention - limited upside
The 3 months correlation between Nio and Autoliv is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and Nio 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 Nio Class A 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 Nio i.e., Nio and Autoliv go up and down completely randomly.
Pair Corralation between Nio and Autoliv
Considering the 90-day investment horizon Nio Class A is expected to under-perform the Autoliv. In addition to that, Nio is 1.9 times more volatile than Autoliv. It trades about -0.22 of its total potential returns per unit of risk. Autoliv is currently generating about 0.05 per unit of volatility. If you would invest 9,708 in Autoliv on August 27, 2024 and sell it today you would earn a total of 181.00 from holding Autoliv or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nio Class A vs. Autoliv
Performance |
| Timeline |
| Nio Class A |
| Autoliv |
Nio and Autoliv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nio and Autoliv
The main advantage of trading using opposite Nio and Autoliv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio 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 Nio Class A 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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