Correlation Between Hansa Investment and Kinnevik Investment

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

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

Diversification Opportunities for Hansa Investment and Kinnevik Investment

-0.17

Correlation Coefficient

Hansa Investment  Kinnevik Investment

Good diversification

The 3 months correlation between Hansa and Kinnevik is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Investment and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Hansa 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 Hansa Investment 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 Hansa Investment i.e., Hansa Investment and Kinnevik Investment go up and down completely randomly.

Pair Corralation between Hansa Investment and Kinnevik Investment

Assuming the 90 days trading horizon Hansa Investment is expected to generate 15.2 times less return on investment than Kinnevik Investment. But when comparing it to its historical volatility, Hansa Investment is 1.29 times less risky than Kinnevik Investment. It trades about 0.02 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  7,507  in Kinnevik Investment AB on November 20, 2024 and sell it today you would earn a total of  1,727  from holding Kinnevik Investment AB or generate 23.01% return on investment over 90 days.

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

Hansa Investment  vs.  Kinnevik Investment AB

Hansa Investment

Risk-Adjusted Performance

Weak

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

Kinnevik Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kinnevik Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hansa Investment and Kinnevik Investment

The main advantage of trading using opposite Hansa Investment and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansa Investment 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 Hansa Investment 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.