Correlation Between Kinnevik Investment and AlzeCure Pharma

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

Diversification Opportunities for Kinnevik Investment and AlzeCure Pharma

0.27

Correlation Coefficient

Kinnevik Investment  AlzeCure Pharma

Modest diversification

The 3 months correlation between Kinnevik and AlzeCure is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and AlzeCure Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlzeCure Pharma 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 AlzeCure Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlzeCure Pharma has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and AlzeCure Pharma go up and down completely randomly.

Pair Corralation between Kinnevik Investment and AlzeCure Pharma

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 0.49 times more return on investment than AlzeCure Pharma. However, Kinnevik Investment AB is 2.04 times less risky than AlzeCure Pharma. It trades about 0.03 of its potential returns per unit of risk. AlzeCure Pharma is currently generating about -0.16 per unit of risk. If you would invest  7,543  in Kinnevik Investment AB on September 16, 2024 and sell it today you would earn a total of  233.00  from holding Kinnevik Investment AB or generate 3.09% return on investment over 90 days.

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

Kinnevik Investment AB  vs.  AlzeCure Pharma

Kinnevik Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

AlzeCure Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AlzeCure Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kinnevik Investment and AlzeCure Pharma

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

The idea behind Kinnevik Investment AB and AlzeCure Pharma 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.