Correlation Between Autoliv and Aeye

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

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

Diversification Opportunities for Autoliv and Aeye

0.43

Correlation Coefficient

Autoliv  Aeye

Very weak diversification

The 3 months correlation between Autoliv and Aeye is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc 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 Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Autoliv i.e., Autoliv and Aeye go up and down completely randomly.

Pair Corralation between Autoliv and Aeye

Considering the 90-day investment horizon Autoliv is expected to generate 12.92 times less return on investment than Aeye. But when comparing it to its historical volatility, Autoliv is 14.85 times less risky than Aeye. It trades about 0.19 of its potential returns per unit of risk. Aeye Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Aeye Inc on May 6, 2025 and sell it today you would earn a total of  220.00  from holding Aeye Inc or generate 323.53% return on investment over 90 days.

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

Autoliv  vs.  Aeye Inc

Autoliv

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Autoliv showed solid returns over the last few months and may actually be approaching a breakup point.

Aeye Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeye Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Aeye reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Autoliv and Aeye

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

The idea behind Autoliv and Aeye Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.