Correlation Between Kinnevik Investment and Ashtead Technology

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

Diversification Opportunities for Kinnevik Investment and Ashtead Technology

0.44

Correlation Coefficient

Kinnevik Investment  Ashtead Technology

Very weak diversification

The 3 months correlation between Kinnevik and Ashtead is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Ashtead Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Technology 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 Ashtead Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Technology has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Ashtead Technology go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Ashtead Technology

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the Ashtead Technology. But the stock apears to be less risky and, when comparing its historical volatility, Kinnevik Investment AB is 1.29 times less risky than Ashtead Technology. The stock trades about -0.06 of its potential returns per unit of risk. The Ashtead Technology Holdings is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  58,200  in Ashtead Technology Holdings on September 25, 2024 and sell it today you would lose (4,600) from holding Ashtead Technology Holdings or give up 7.9% of portfolio value over 90 days.

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

Kinnevik Investment AB  vs.  Ashtead Technology Holdings

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ashtead Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashtead Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ashtead Technology is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kinnevik Investment and Ashtead Technology

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

The idea behind Kinnevik Investment AB and Ashtead Technology Holdings 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.