Correlation Between ECARX Holdings and Autoliv

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

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

Diversification Opportunities for ECARX Holdings and Autoliv

-0.62

Correlation Coefficient

ECARX Holdings  Autoliv

Excellent diversification

The 3 months correlation between ECARX and Autoliv is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding ECARX Holdings Class and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and ECARX Holdings 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 ECARX Holdings Class 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 ECARX Holdings i.e., ECARX Holdings and Autoliv go up and down completely randomly.

Pair Corralation between ECARX Holdings and Autoliv

Considering the 90-day investment horizon ECARX Holdings Class is expected to under-perform the Autoliv. In addition to that, ECARX Holdings is 4.3 times more volatile than Autoliv. It trades about -0.28 of its total potential returns per unit of risk. Autoliv is currently generating about 0.15 per unit of volatility. If you would invest  12,318  in Autoliv on March 5, 2024 and sell it today you would earn a total of  439.00  from holding Autoliv or generate 3.56% return on investment over 90 days.

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

ECARX Holdings Class  vs.  Autoliv

ECARX Holdings Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECARX Holdings Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Autoliv

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Autoliv may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with ECARX Holdings and Autoliv

The main advantage of trading using opposite ECARX Holdings and Autoliv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECARX Holdings 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 ECARX Holdings Class 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.