Correlation Between Kinnevik Investment and Gaming Realms

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

Diversification Opportunities for Kinnevik Investment and Gaming Realms

0.42

Correlation Coefficient

Kinnevik Investment  Gaming Realms

Very weak diversification

The 3 months correlation between Kinnevik and Gaming is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Gaming Realms plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Realms plc 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 Gaming Realms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Realms plc has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Gaming Realms go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Gaming Realms

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the Gaming Realms. But the stock apears to be less risky and, when comparing its historical volatility, Kinnevik Investment AB is 1.08 times less risky than Gaming Realms. The stock trades about -0.04 of its potential returns per unit of risk. The Gaming Realms plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,500  in Gaming Realms plc on September 20, 2024 and sell it today you would earn a total of  1,100  from holding Gaming Realms plc or generate 44.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.81%
Values	Daily Returns

Kinnevik Investment AB  vs.  Gaming Realms plc

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.

Gaming Realms plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaming Realms plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Kinnevik Investment and Gaming Realms

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

The idea behind Kinnevik Investment AB and Gaming Realms plc 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 Transaction History module to view history of all your transactions and understand their impact on performance.