Correlation Between Coor Service and Kinnevik Investment

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

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

Diversification Opportunities for Coor Service and Kinnevik Investment

0.39

Correlation Coefficient

Coor Service  Kinnevik Investment

Weak diversification

The 3 months correlation between Coor and Kinnevik is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Coor Service Management and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Coor Service 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 Coor Service Management 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 Coor Service i.e., Coor Service and Kinnevik Investment go up and down completely randomly.

Pair Corralation between Coor Service and Kinnevik Investment

Assuming the 90 days trading horizon Coor Service Management is expected to under-perform the Kinnevik Investment. But the stock apears to be less risky and, when comparing its historical volatility, Coor Service Management is 1.01 times less risky than Kinnevik Investment. The stock trades about -0.16 of its potential returns per unit of risk. The Kinnevik Investment AB is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  8,051  in Kinnevik Investment AB on August 31, 2024 and sell it today you would lose (441.00) from holding Kinnevik Investment AB or give up 5.48% of portfolio value over 90 days.

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

Coor Service Management  vs.  Kinnevik Investment AB

Coor Service Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coor Service Management 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 December 2024. 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. In spite of comparatively stable basic indicators, Kinnevik Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Coor Service and Kinnevik Investment

The main advantage of trading using opposite Coor Service and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coor Service 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 Coor Service Management 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.