Correlation Between Catena Media and Kinnevik Investment

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

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

Diversification Opportunities for Catena Media and Kinnevik Investment

0.34

Correlation Coefficient

Catena Media  Kinnevik Investment

Weak diversification

The 3 months correlation between Catena and Kinnevik is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media plc and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Catena Media 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 Catena Media plc are associated (or correlated) with Kinnevik Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinnevik Investment has no effect on the direction of Catena Media i.e., Catena Media and Kinnevik Investment go up and down completely randomly.

Pair Corralation between Catena Media and Kinnevik Investment

Assuming the 90 days trading horizon Catena Media plc is expected to under-perform the Kinnevik Investment. In addition to that, Catena Media is 1.92 times more volatile than Kinnevik Investment AB. It trades about -0.18 of its total potential returns per unit of risk. Kinnevik Investment AB is currently generating about -0.01 per unit of volatility. If you would invest  7,831  in Kinnevik Investment AB on September 3, 2024 and sell it today you would lose (191.00) from holding Kinnevik Investment AB or give up 2.44% of portfolio value over 90 days.

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

Catena Media plc  vs.  Kinnevik Investment AB

Catena Media plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catena Media plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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. Despite somewhat strong basic indicators, Kinnevik Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catena Media and Kinnevik Investment

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

The idea behind Catena Media plc and Kinnevik Investment 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.