Correlation Between SecureTech Innovations and Autoliv

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

By analyzing existing cross correlation between SecureTech Innovations and Autoliv, you can compare the effects of market volatilities on SecureTech Innovations and Autoliv 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 SecureTech Innovations with a short position of Autoliv. Check out your portfolio center. Please also check ongoing floating volatility patterns of SecureTech Innovations and Autoliv.

Diversification Opportunities for SecureTech Innovations and Autoliv

0.12

Correlation Coefficient

SecureTech Innovations  Autoliv

Average diversification

The 3 months correlation between SecureTech and Autoliv is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SecureTech Innovations and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and SecureTech Innovations 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 SecureTech Innovations are associated (or correlated) with Autoliv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoliv has no effect on the direction of SecureTech Innovations i.e., SecureTech Innovations and Autoliv go up and down completely randomly.

Pair Corralation between SecureTech Innovations and Autoliv

Given the investment horizon of 90 days SecureTech Innovations is expected to generate 17.68 times more return on investment than Autoliv. However, SecureTech Innovations is 17.68 times more volatile than Autoliv. It trades about 0.12 of its potential returns per unit of risk. Autoliv is currently generating about 0.06 per unit of risk. If you would invest  100.00  in SecureTech Innovations on October 24, 2024 and sell it today you would earn a total of  50.00  from holding SecureTech Innovations or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

SecureTech Innovations  vs.  Autoliv

SecureTech Innovations

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SecureTech Innovations are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, SecureTech Innovations demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Autoliv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Autoliv may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SecureTech Innovations and Autoliv

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

The idea behind SecureTech Innovations and Autoliv 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.