Correlation Between Kinnevik Investment and SolTech Energy

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

Diversification Opportunities for Kinnevik Investment and SolTech Energy

0.25

Correlation Coefficient

Kinnevik Investment  SolTech Energy

Modest diversification

The 3 months correlation between Kinnevik and SolTech is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and SolTech Energy Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolTech Energy Sweden 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 SolTech Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolTech Energy Sweden has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and SolTech Energy go up and down completely randomly.

Pair Corralation between Kinnevik Investment and SolTech Energy

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the SolTech Energy. But the stock apears to be less risky and, when comparing its historical volatility, Kinnevik Investment AB is 3.81 times less risky than SolTech Energy. The stock trades about -0.01 of its potential returns per unit of risk. The SolTech Energy Sweden is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  189.00  in SolTech Energy Sweden on December 11, 2024 and sell it today you would earn a total of  97.00  from holding SolTech Energy Sweden or generate 51.32% 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.  SolTech Energy Sweden

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.

SolTech Energy Sweden

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SolTech Energy Sweden are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, SolTech Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinnevik Investment and SolTech Energy

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

The idea behind Kinnevik Investment AB and SolTech Energy Sweden 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.