Correlation Between Alphabet and Kinnevik Investment

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

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

Diversification Opportunities for Alphabet and Kinnevik Investment

-0.03

Correlation Coefficient

Alphabet  Kinnevik Investment

Good diversification

The 3 months correlation between Alphabet and Kinnevik is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Kinnevik Investment go up and down completely randomly.

Pair Corralation between Alphabet and Kinnevik Investment

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.68 times more return on investment than Kinnevik Investment. However, Alphabet Inc Class C is 1.47 times less risky than Kinnevik Investment. It trades about 0.08 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about -0.03 per unit of risk. If you would invest  15,840  in Alphabet Inc Class C on September 2, 2024 and sell it today you would earn a total of  1,209  from holding Alphabet Inc Class C or generate 7.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Alphabet Inc Class C  vs.  Kinnevik Investment AB

Alphabet Class C

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Alphabet and Kinnevik Investment

The main advantage of trading using opposite Alphabet and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class C 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.