Correlation Between Stoneridge and Autoliv

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

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

Diversification Opportunities for Stoneridge and Autoliv

0.12

Correlation Coefficient

Stoneridge  Autoliv

Average diversification

The 3 months correlation between Stoneridge and Autoliv is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Stoneridge and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and Stoneridge 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 Stoneridge 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 Stoneridge i.e., Stoneridge and Autoliv go up and down completely randomly.

Pair Corralation between Stoneridge and Autoliv

Considering the 90-day investment horizon Stoneridge is expected to under-perform the Autoliv. In addition to that, Stoneridge is 2.54 times more volatile than Autoliv. It trades about -0.19 of its total potential returns per unit of risk. Autoliv is currently generating about 0.01 per unit of volatility. If you would invest  9,843  in Autoliv on November 28, 2024 and sell it today you would earn a total of  60.00  from holding Autoliv or generate 0.61% return on investment over 90 days.

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

Stoneridge  vs.  Autoliv

Stoneridge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stoneridge has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Autoliv

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 1 (%) 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.

Pair Trading with Stoneridge and Autoliv

The main advantage of trading using opposite Stoneridge and Autoliv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoneridge 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 Stoneridge 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.