Correlation Between Kinnevik Investment and Intermediate Capital

Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on Kinnevik Investment and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and Intermediate Capital.

Diversification Opportunities for Kinnevik Investment and Intermediate Capital

0.92

Correlation Coefficient

Kinnevik Investment  Intermediate Capital

Almost no diversification

The 3 months correlation between Kinnevik and Intermediate is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Intermediate Capital go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Intermediate Capital

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 1.07 times more return on investment than Intermediate Capital. However, Kinnevik Investment is 1.07 times more volatile than Intermediate Capital Group. It trades about 0.11 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.09 per unit of risk. If you would invest  7,695  in Kinnevik Investment AB on December 1, 2024 and sell it today you would earn a total of  994.00  from holding Kinnevik Investment AB or generate 12.92% return on investment over 90 days.

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

Kinnevik Investment AB  vs.  Intermediate Capital Group

Kinnevik Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kinnevik Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Intermediate Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Intermediate Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kinnevik Investment and Intermediate Capital

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

The idea behind Kinnevik Investment AB and Intermediate Capital Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.