Correlation Between Kinnevik Investment and Sdiptech

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

Diversification Opportunities for Kinnevik Investment and Sdiptech

0.7

Correlation Coefficient

Kinnevik Investment  Sdiptech

Poor diversification

The 3 months correlation between Kinnevik and Sdiptech is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Sdiptech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sdiptech AB 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 Sdiptech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sdiptech AB has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Sdiptech go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Sdiptech

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the Sdiptech. In addition to that, Kinnevik Investment is 3.14 times more volatile than Sdiptech AB. It trades about -0.01 of its total potential returns per unit of risk. Sdiptech AB is currently generating about 0.04 per unit of volatility. If you would invest  12,450  in Sdiptech AB on December 11, 2024 and sell it today you would earn a total of  200.00  from holding Sdiptech AB or generate 1.61% return on investment over 90 days.

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

Kinnevik Investment AB  vs.  Sdiptech AB

Kinnevik Investment

Risk-Adjusted Performance

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.

Sdiptech AB

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sdiptech AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Sdiptech is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kinnevik Investment and Sdiptech

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

The idea behind Kinnevik Investment AB and Sdiptech 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.