Correlation Between Kinnevik Investment and Vodafone Group

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

Diversification Opportunities for Kinnevik Investment and Vodafone Group

-0.38

Correlation Coefficient

Kinnevik Investment  Vodafone Group

Very good diversification

The 3 months correlation between Kinnevik and Vodafone is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Vodafone Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodafone Group PLC 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 Vodafone Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodafone Group PLC has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Vodafone Group go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Vodafone Group

Assuming the 90 days trading horizon Kinnevik Investment is expected to generate 4.11 times less return on investment than Vodafone Group. In addition to that, Kinnevik Investment is 1.09 times more volatile than Vodafone Group PLC. It trades about 0.02 of its total potential returns per unit of risk. Vodafone Group PLC is currently generating about 0.1 per unit of volatility. If you would invest  6,776  in Vodafone Group PLC on December 24, 2024 and sell it today you would earn a total of  758.00  from holding Vodafone Group PLC or generate 11.19% return on investment over 90 days.

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

Kinnevik Investment AB  vs.  Vodafone Group PLC

Kinnevik Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Kinnevik Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Vodafone Group PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vodafone Group PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Vodafone Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kinnevik Investment and Vodafone Group

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

The idea behind Kinnevik Investment AB and Vodafone Group PLC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.