Correlation Between Service Team and Autoliv

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

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

Diversification Opportunities for Service Team and Autoliv

0.0

Correlation Coefficient

Service Team  Autoliv

Pay attention - limited upside

The 3 months correlation between Service and Autoliv is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Service Team and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and Service Team 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 Service Team 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 Service Team i.e., Service Team and Autoliv go up and down completely randomly.

Pair Corralation between Service Team and Autoliv

Given the investment horizon of 90 days Service Team is expected to under-perform the Autoliv. In addition to that, Service Team is 15.12 times more volatile than Autoliv. It trades about -0.22 of its total potential returns per unit of risk. Autoliv is currently generating about -0.11 per unit of volatility. If you would invest  10,058  in Autoliv on September 14, 2024 and sell it today you would lose (362.00) from holding Autoliv or give up 3.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Service Team  vs.  Autoliv

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.

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.

Pair Trading with Service Team and Autoliv

The main advantage of trading using opposite Service Team and Autoliv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service Team 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 Service Team 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..