Correlation Between Kinnevik Investment and Verizon Communications

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

Diversification Opportunities for Kinnevik Investment and Verizon Communications

0.54

Correlation Coefficient

Kinnevik Investment  Verizon Communications

Very weak diversification

The 3 months correlation between Kinnevik and Verizon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Verizon Communications go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Verizon Communications

Assuming the 90 days trading horizon Kinnevik Investment is expected to generate 2.21 times less return on investment than Verizon Communications. In addition to that, Kinnevik Investment is 1.65 times more volatile than Verizon Communications. It trades about 0.02 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.07 per unit of volatility. If you would invest  4,140  in Verizon Communications on September 5, 2024 and sell it today you would earn a total of  250.00  from holding Verizon Communications or generate 6.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Kinnevik Investment AB  vs.  Verizon Communications

Kinnevik Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Verizon Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Verizon Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Verizon Communications 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 Kinnevik Investment and Verizon Communications

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

The idea behind Kinnevik Investment AB and Verizon Communications 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.