Correlation Between Autoliv and Continental Aktiengesellscha

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

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

Diversification Opportunities for Autoliv and Continental Aktiengesellscha

0.41

Correlation Coefficient

Autoliv  Continental Aktiengesellscha

Very weak diversification

The 3 months correlation between Autoliv and Continental is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha 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 Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of Autoliv i.e., Autoliv and Continental Aktiengesellscha go up and down completely randomly.

Pair Corralation between Autoliv and Continental Aktiengesellscha

Considering the 90-day investment horizon Autoliv is expected to generate 4.28 times less return on investment than Continental Aktiengesellscha. But when comparing it to its historical volatility, Autoliv is 2.02 times less risky than Continental Aktiengesellscha. It trades about 0.04 of its potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,760  in Continental Aktiengesellschaft on September 14, 2024 and sell it today you would earn a total of  1,045  from holding Continental Aktiengesellschaft or generate 18.14% return on investment over 90 days.

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

Autoliv  vs.  Continental Aktiengesellschaft

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 fairly stable essential indicators, Autoliv is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Continental Aktiengesellscha

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Aktiengesellschaft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Continental Aktiengesellscha reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Autoliv and Continental Aktiengesellscha

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

The idea behind Autoliv and Continental Aktiengesellschaft 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.