Correlation Between Kinnevik Investment and Storskogen Group

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

Diversification Opportunities for Kinnevik Investment and Storskogen Group

0.2

Correlation Coefficient

Kinnevik Investment  Storskogen Group

Modest diversification

The 3 months correlation between Kinnevik and Storskogen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Storskogen Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storskogen Group 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 Storskogen Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storskogen Group has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Storskogen Group go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Storskogen Group

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the Storskogen Group. But the stock apears to be less risky and, when comparing its historical volatility, Kinnevik Investment AB is 1.32 times less risky than Storskogen Group. The stock trades about 0.0 of its potential returns per unit of risk. The Storskogen Group AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  997.00  in Storskogen Group AB on October 12, 2024 and sell it today you would earn a total of  124.00  from holding Storskogen Group AB or generate 12.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.75%
Values	Daily Returns

Kinnevik Investment AB  vs.  Storskogen Group AB

Kinnevik Investment

Risk-Adjusted Performance

0 of 100

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.

Storskogen Group

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Kinnevik Investment and Storskogen Group

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

The idea behind Kinnevik Investment AB and Storskogen Group 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.