Correlation Between Swedbank and Kinnevik Investment

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

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

Diversification Opportunities for Swedbank and Kinnevik Investment

-0.04

Correlation Coefficient

Swedbank  Kinnevik Investment

Good diversification

The 3 months correlation between Swedbank and Kinnevik is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Swedbank 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 Swedbank AB 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 Swedbank i.e., Swedbank and Kinnevik Investment go up and down completely randomly.

Pair Corralation between Swedbank and Kinnevik Investment

Assuming the 90 days trading horizon Swedbank AB is expected to generate 0.52 times more return on investment than Kinnevik Investment. However, Swedbank AB is 1.93 times less risky than Kinnevik Investment. It trades about 0.05 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about -0.01 per unit of risk. If you would invest  16,192  in Swedbank AB on September 26, 2024 and sell it today you would earn a total of  5,378  from holding Swedbank AB or generate 33.21% return on investment over 90 days.

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

Swedbank AB  vs.  Kinnevik Investment AB

Swedbank AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Swedbank and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank 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 Swedbank AB 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.