Correlation Between AES and Autoliv

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

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

Diversification Opportunities for AES and Autoliv

0.66

Correlation Coefficient

AES  Autoliv

Poor diversification

The 3 months correlation between AES and Autoliv is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and AES 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 The AES 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 AES i.e., AES and Autoliv go up and down completely randomly.

Pair Corralation between AES and Autoliv

Considering the 90-day investment horizon The AES is expected to generate 1.43 times more return on investment than Autoliv. However, AES is 1.43 times more volatile than Autoliv. It trades about 0.15 of its potential returns per unit of risk. Autoliv is currently generating about 0.12 per unit of risk. If you would invest  999.00  in The AES on May 21, 2025 and sell it today you would earn a total of  331.00  from holding The AES or generate 33.13% return on investment over 90 days.

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

The AES  vs.  Autoliv

AES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, AES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Autoliv

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Autoliv exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AES and Autoliv

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