Correlation Between SBB-B and Kinnevik Investment

Can any of the company-specific risk be diversified away by investing in both SBB-B and Kinnevik Investment 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 SBB-B and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samhllsbyggnadsbolaget i Norden and Kinnevik Investment AB, you can compare the effects of market volatilities on SBB-B and Kinnevik Investment 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 SBB-B with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBB-B and Kinnevik Investment.

Diversification Opportunities for SBB-B and Kinnevik Investment

0.47

Correlation Coefficient

SBB-B  Kinnevik Investment

Very weak diversification

The 3 months correlation between SBB-B and Kinnevik is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Samhllsbyggnadsbolaget i Norde and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and SBB-B 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 Samhllsbyggnadsbolaget i Norden are associated (or correlated) with Kinnevik Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinnevik Investment has no effect on the direction of SBB-B i.e., SBB-B and Kinnevik Investment go up and down completely randomly.

Pair Corralation between SBB-B and Kinnevik Investment

Assuming the 90 days trading horizon Samhllsbyggnadsbolaget i Norden is expected to generate 1.94 times more return on investment than Kinnevik Investment. However, SBB-B is 1.94 times more volatile than Kinnevik Investment AB. It trades about 0.05 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about -0.03 per unit of risk. If you would invest  288.00  in Samhllsbyggnadsbolaget i Norden on September 23, 2024 and sell it today you would earn a total of  122.00  from holding Samhllsbyggnadsbolaget i Norden or generate 42.36% return on investment over 90 days.

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

Samhllsbyggnadsbolaget i Norde  vs.  Kinnevik Investment AB

Samhllsbyggnadsbolaget

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samhllsbyggnadsbolaget i Norden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SBB-B and Kinnevik Investment

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

The idea behind Samhllsbyggnadsbolaget i Norden and Kinnevik Investment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.