Correlation Between SSAB AB and Autoliv

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

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

Diversification Opportunities for SSAB AB and Autoliv

0.31

Correlation Coefficient

SSAB AB  Autoliv

Weak diversification

The 3 months correlation between SSAB and Autoliv is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and SSAB AB 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 SSAB AB 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 SSAB AB i.e., SSAB AB and Autoliv go up and down completely randomly.

Pair Corralation between SSAB AB and Autoliv

Assuming the 90 days trading horizon SSAB AB is expected to generate 1.01 times more return on investment than Autoliv. However, SSAB AB is 1.01 times more volatile than Autoliv. It trades about 0.07 of its potential returns per unit of risk. Autoliv is currently generating about 0.05 per unit of risk. If you would invest  4,589  in SSAB AB on September 3, 2024 and sell it today you would earn a total of  346.00  from holding SSAB AB or generate 7.54% return on investment over 90 days.

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

SSAB AB  vs.  Autoliv

SSAB AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SSAB AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, SSAB AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Autoliv

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Autoliv is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SSAB AB and Autoliv

The main advantage of trading using opposite SSAB AB and Autoliv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSAB AB 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 SSAB AB 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.