Correlation Between Kinnevik Investment and Nordic Asia

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

Diversification Opportunities for Kinnevik Investment and Nordic Asia

-0.34

Correlation Coefficient

Kinnevik Investment  Nordic Asia

Very good diversification

The 3 months correlation between Kinnevik and Nordic is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Nordic Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Asia Investment 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 Nordic Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Asia Investment has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Nordic Asia go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Nordic Asia

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 0.88 times more return on investment than Nordic Asia. However, Kinnevik Investment AB is 1.13 times less risky than Nordic Asia. It trades about 0.0 of its potential returns per unit of risk. Nordic Asia Investment is currently generating about -0.02 per unit of risk. If you would invest  7,362  in Kinnevik Investment AB on December 30, 2024 and sell it today you would lose (123.00) from holding Kinnevik Investment AB or give up 1.67% of portfolio value over 90 days.

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

Kinnevik Investment AB  vs.  Nordic Asia Investment

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.

Nordic Asia Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordic Asia Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Nordic Asia is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kinnevik Investment and Nordic Asia

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

The idea behind Kinnevik Investment AB and Nordic Asia Investment 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.