Correlation Between Autoliv and PlayAGS

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

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

Diversification Opportunities for Autoliv and PlayAGS

0.16

Correlation Coefficient

Autoliv  PlayAGS

Average diversification

The 3 months correlation between Autoliv and PlayAGS is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and PlayAGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayAGS 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 PlayAGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayAGS has no effect on the direction of Autoliv i.e., Autoliv and PlayAGS go up and down completely randomly.

Pair Corralation between Autoliv and PlayAGS

Considering the 90-day investment horizon Autoliv is expected to under-perform the PlayAGS. But the stock apears to be less risky and, when comparing its historical volatility, Autoliv is 2.97 times less risky than PlayAGS. The stock trades about -0.1 of its potential returns per unit of risk. The PlayAGS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  870.00  in PlayAGS on January 26, 2024 and sell it today you would earn a total of  2.00  from holding PlayAGS or generate 0.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Autoliv  vs.  PlayAGS

Autoliv

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Autoliv may actually be approaching a critical reversion point that can send shares even higher in May 2024.

PlayAGS

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PlayAGS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, PlayAGS may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Autoliv and PlayAGS

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

The idea behind Autoliv and PlayAGS 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.