Correlation Between Kinnevik Investment and Tatton Asset

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

Diversification Opportunities for Kinnevik Investment and Tatton Asset

-0.57

Correlation Coefficient

Kinnevik Investment  Tatton Asset

Excellent diversification

The 3 months correlation between Kinnevik and Tatton is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Tatton Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatton Asset Management 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 Tatton Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatton Asset Management has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Tatton Asset go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Tatton Asset

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the Tatton Asset. In addition to that, Kinnevik Investment is 1.35 times more volatile than Tatton Asset Management. It trades about -0.03 of its total potential returns per unit of risk. Tatton Asset Management is currently generating about -0.02 per unit of volatility. If you would invest  71,223  in Tatton Asset Management on September 2, 2024 and sell it today you would lose (1,823) from holding Tatton Asset Management or give up 2.56% of portfolio value over 90 days.

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

Kinnevik Investment AB  vs.  Tatton Asset Management

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 comparatively stable basic indicators, Kinnevik Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Tatton Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tatton Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Tatton Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kinnevik Investment and Tatton Asset

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

The idea behind Kinnevik Investment AB and Tatton Asset Management 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.