Correlation Between Autoliv and SES AI

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

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

Diversification Opportunities for Autoliv and SES AI

-0.27

Correlation Coefficient

Autoliv  SES AI

Very good diversification

The 3 months correlation between Autoliv and SES is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and SES AI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES AI Corp 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 SES AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES AI Corp has no effect on the direction of Autoliv i.e., Autoliv and SES AI go up and down completely randomly.

Pair Corralation between Autoliv and SES AI

Considering the 90-day investment horizon Autoliv is expected to generate 0.26 times more return on investment than SES AI. However, Autoliv is 3.85 times less risky than SES AI. It trades about -0.03 of its potential returns per unit of risk. SES AI Corp is currently generating about -0.47 per unit of risk. If you would invest  9,391  in Autoliv on December 5, 2024 and sell it today you would lose (141.00) from holding Autoliv or give up 1.5% of portfolio value over 90 days.

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

Autoliv  vs.  SES AI Corp

Autoliv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Autoliv has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

SES AI Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SES AI Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, SES AI unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Autoliv and SES AI

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

The idea behind Autoliv and SES AI Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.