Correlation Between Rolling Optics and Autoliv

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

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

Diversification Opportunities for Rolling Optics and Autoliv

0.82

Correlation Coefficient

Rolling Optics  Autoliv

Very poor diversification

The 3 months correlation between Rolling and Autoliv is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Rolling Optics Holding and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and Rolling Optics 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 Rolling Optics Holding 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 Rolling Optics i.e., Rolling Optics and Autoliv go up and down completely randomly.

Pair Corralation between Rolling Optics and Autoliv

Assuming the 90 days horizon Rolling Optics Holding is expected to generate 3.47 times more return on investment than Autoliv. However, Rolling Optics is 3.47 times more volatile than Autoliv. It trades about 0.2 of its potential returns per unit of risk. Autoliv is currently generating about 0.14 per unit of risk. If you would invest  50.00  in Rolling Optics Holding on May 2, 2025 and sell it today you would earn a total of  69.00  from holding Rolling Optics Holding or generate 138.0% return on investment over 90 days.

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

Rolling Optics Holding  vs.  Autoliv

Rolling Optics Holding

Risk-Adjusted Performance

Good

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

Autoliv

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 10 (%) 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 Rolling Optics and Autoliv

The main advantage of trading using opposite Rolling Optics and Autoliv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rolling Optics 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 Rolling Optics Holding 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.