Correlation Between Autoliv and B3 Consulting

Can any of the company-specific risk be diversified away by investing in both Autoliv and B3 Consulting 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 B3 Consulting into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Autoliv and B3 Consulting Group, you can compare the effects of market volatilities on Autoliv and B3 Consulting 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 B3 Consulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and B3 Consulting.

Diversification Opportunities for Autoliv and B3 Consulting

-0.47

Correlation Coefficient

Autoliv  B3 Consulting

Very good diversification

The 3 months correlation between Autoliv and B3 Consulting is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and B3 Consulting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B3 Consulting Group 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 B3 Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B3 Consulting Group has no effect on the direction of Autoliv i.e., Autoliv and B3 Consulting go up and down completely randomly.

Pair Corralation between Autoliv and B3 Consulting

Assuming the 90 days trading horizon Autoliv is expected to generate 0.79 times more return on investment than B3 Consulting. However, Autoliv is 1.27 times less risky than B3 Consulting. It trades about 0.21 of its potential returns per unit of risk. B3 Consulting Group is currently generating about -0.06 per unit of risk. If you would invest  101,600  in Autoliv on August 31, 2024 and sell it today you would earn a total of  7,340  from holding Autoliv or generate 7.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Autoliv  vs.  B3 Consulting Group

Autoliv

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Autoliv is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

B3 Consulting Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B3 Consulting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Autoliv and B3 Consulting

The main advantage of trading using opposite Autoliv and B3 Consulting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv position performs unexpectedly, B3 Consulting 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 B3 Consulting will offset losses from the drop in B3 Consulting's long position.

The idea behind Autoliv and B3 Consulting Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.