Correlation Between Embellence Group and Kinnevik Investment

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

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

Diversification Opportunities for Embellence Group and Kinnevik Investment

0.42

Correlation Coefficient

Embellence Group  Kinnevik Investment

Very weak diversification

The 3 months correlation between Embellence and Kinnevik is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Embellence Group AB and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Embellence Group 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 Embellence Group AB 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 Embellence Group i.e., Embellence Group and Kinnevik Investment go up and down completely randomly.

Pair Corralation between Embellence Group and Kinnevik Investment

Assuming the 90 days trading horizon Embellence Group AB is expected to generate 1.19 times more return on investment than Kinnevik Investment. However, Embellence Group is 1.19 times more volatile than Kinnevik Investment AB. It trades about 0.18 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about -0.06 per unit of risk. If you would invest  3,030  in Embellence Group AB on October 8, 2024 and sell it today you would earn a total of  210.00  from holding Embellence Group AB or generate 6.93% return on investment over 90 days.

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

Embellence Group AB  vs.  Kinnevik Investment AB

Embellence Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embellence Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Embellence Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the 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 Embellence Group and Kinnevik Investment

The main advantage of trading using opposite Embellence Group and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embellence Group 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 Embellence Group AB 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.