Correlation Between Autoliv and Service Team

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

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

Diversification Opportunities for Autoliv and Service Team

0.0

Correlation Coefficient

Autoliv  Service Team

Pay attention - limited upside

The 3 months correlation between Autoliv and Service is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Service Team in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Team 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 Service Team. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Team has no effect on the direction of Autoliv i.e., Autoliv and Service Team go up and down completely randomly.

Pair Corralation between Autoliv and Service Team

Considering the 90-day investment horizon Autoliv is expected to generate 0.15 times more return on investment than Service Team. However, Autoliv is 6.66 times less risky than Service Team. It trades about 0.04 of its potential returns per unit of risk. Service Team is currently generating about -0.13 per unit of risk. If you would invest  9,416  in Autoliv on September 14, 2024 and sell it today you would earn a total of  369.00  from holding Autoliv or generate 3.92% return on investment over 90 days.

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

Autoliv  vs.  Service Team

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.

Service Team

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Service Team has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Autoliv and Service Team

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

The idea behind Autoliv and Service Team 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.