Correlation Between Kinnevik Investment and Industrivarden

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

Diversification Opportunities for Kinnevik Investment and Industrivarden

0.95

Correlation Coefficient

Kinnevik Investment  Industrivarden

Almost no diversification

The 3 months correlation between Kinnevik and Industrivarden is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser 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 Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Industrivarden go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Industrivarden

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the Industrivarden. In addition to that, Kinnevik Investment is 2.1 times more volatile than Industrivarden AB ser. It trades about -0.02 of its total potential returns per unit of risk. Industrivarden AB ser is currently generating about 0.1 per unit of volatility. If you would invest  25,681  in Industrivarden AB ser on December 2, 2024 and sell it today you would earn a total of  14,889  from holding Industrivarden AB ser or generate 57.98% return on investment over 90 days.

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

Kinnevik Investment AB  vs.  Industrivarden AB ser

Kinnevik Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kinnevik Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Industrivarden AB ser

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrivarden AB ser are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Industrivarden may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kinnevik Investment and Industrivarden

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

The idea behind Kinnevik Investment AB and Industrivarden AB ser 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.