Correlation Between Kinnevik Investment and GSTechnologies

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

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

Diversification Opportunities for Kinnevik Investment and GSTechnologies

-0.36

Correlation Coefficient

Kinnevik Investment  GSTechnologies

Very good diversification

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

Pair Corralation between Kinnevik Investment and GSTechnologies

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the GSTechnologies. But the stock apears to be less risky and, when comparing its historical volatility, Kinnevik Investment AB is 3.8 times less risky than GSTechnologies. The stock trades about -0.06 of its potential returns per unit of risk. The GSTechnologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  57.00  in GSTechnologies on October 4, 2024 and sell it today you would earn a total of  233.00  from holding GSTechnologies or generate 408.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.81%
Values	Daily Returns

Kinnevik Investment AB  vs.  GSTechnologies

Kinnevik Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinnevik Investment AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

GSTechnologies

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GSTechnologies are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GSTechnologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinnevik Investment and GSTechnologies

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

The idea behind Kinnevik Investment AB and GSTechnologies 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..