Correlation Between Autoliv and SECITS Holding

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

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

Diversification Opportunities for Autoliv and SECITS Holding

-0.46

Correlation Coefficient

Autoliv  SECITS Holding

Very good diversification

The 3 months correlation between Autoliv and SECITS is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and SECITS Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECITS Holding AB 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 SECITS Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECITS Holding AB has no effect on the direction of Autoliv i.e., Autoliv and SECITS Holding go up and down completely randomly.

Pair Corralation between Autoliv and SECITS Holding

Assuming the 90 days trading horizon Autoliv is expected to generate 0.15 times more return on investment than SECITS Holding. However, Autoliv is 6.67 times less risky than SECITS Holding. It trades about 0.04 of its potential returns per unit of risk. SECITS Holding AB is currently generating about 0.0 per unit of risk. If you would invest  104,263  in Autoliv on September 2, 2024 and sell it today you would earn a total of  3,737  from holding Autoliv or generate 3.58% 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.  SECITS Holding AB

Autoliv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 2 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

SECITS Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SECITS Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SECITS Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Autoliv and SECITS Holding

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

The idea behind Autoliv and SECITS Holding AB 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.

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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.