Correlation Between Autoliv and Clas Ohlson

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

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

Diversification Opportunities for Autoliv and Clas Ohlson

0.87

Correlation Coefficient

Autoliv  Clas Ohlson

Very poor diversification

The 3 months correlation between Autoliv and Clas is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Clas Ohlson AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clas Ohlson AB 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 Clas Ohlson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clas Ohlson AB has no effect on the direction of Autoliv i.e., Autoliv and Clas Ohlson go up and down completely randomly.

Pair Corralation between Autoliv and Clas Ohlson

Assuming the 90 days trading horizon Autoliv is expected to generate 0.56 times more return on investment than Clas Ohlson. However, Autoliv is 1.77 times less risky than Clas Ohlson. It trades about 0.31 of its potential returns per unit of risk. Clas Ohlson AB is currently generating about 0.14 per unit of risk. If you would invest  82,380  in Autoliv on April 22, 2025 and sell it today you would earn a total of  26,520  from holding Autoliv or generate 32.19% return on investment over 90 days.

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

Autoliv  vs.  Clas Ohlson AB

Autoliv

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 24 (%) 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.

Clas Ohlson AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clas Ohlson AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clas Ohlson sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Autoliv and Clas Ohlson

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

The idea behind Autoliv and Clas Ohlson AB 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.