Correlation Between Autoliv and Fly E

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

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

Diversification Opportunities for Autoliv and Fly E

0.74

Correlation Coefficient

Autoliv  Fly E

Poor diversification

The 3 months correlation between Autoliv and Fly is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Fly E Group, Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fly E Group, 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 Fly E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fly E Group, has no effect on the direction of Autoliv i.e., Autoliv and Fly E go up and down completely randomly.

Pair Corralation between Autoliv and Fly E

Considering the 90-day investment horizon Autoliv is expected to generate 0.17 times more return on investment than Fly E. However, Autoliv is 5.85 times less risky than Fly E. It trades about -0.09 of its potential returns per unit of risk. Fly E Group, Common is currently generating about -0.16 per unit of risk. If you would invest  10,816  in Autoliv on July 13, 2024 and sell it today you would lose (1,292) from holding Autoliv or give up 11.95% of portfolio value over 90 days.

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

Autoliv  vs.  Fly E Group, Common

Autoliv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autoliv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Fly E Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fly E Group, Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in November 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Autoliv and Fly E

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

The idea behind Autoliv and Fly E Group, Common 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.