Correlation Between Autoliv and Amerityre Corp

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

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

Diversification Opportunities for Autoliv and Amerityre Corp

-0.36

Correlation Coefficient

Autoliv  Amerityre Corp

Very good diversification

The 3 months correlation between Autoliv and Amerityre is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Amerityre Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amerityre Corp 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 Amerityre Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amerityre Corp has no effect on the direction of Autoliv i.e., Autoliv and Amerityre Corp go up and down completely randomly.

Pair Corralation between Autoliv and Amerityre Corp

If you would invest  9,845  in Autoliv on September 5, 2024 and sell it today you would lose (70.00) from holding Autoliv or give up 0.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Autoliv  vs.  Amerityre Corp

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 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.

Amerityre Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amerityre Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amerityre Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Autoliv and Amerityre Corp

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

The idea behind Autoliv and Amerityre Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..