Correlation Between Kinnevik Investment and ImmuPharma PLC

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

Diversification Opportunities for Kinnevik Investment and ImmuPharma PLC

0.15

Correlation Coefficient

Kinnevik Investment  ImmuPharma PLC

Average diversification

The 3 months correlation between Kinnevik and ImmuPharma is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and ImmuPharma PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImmuPharma 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 ImmuPharma PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImmuPharma PLC has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and ImmuPharma PLC go up and down completely randomly.

Pair Corralation between Kinnevik Investment and ImmuPharma PLC

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 0.56 times more return on investment than ImmuPharma PLC. However, Kinnevik Investment AB is 1.78 times less risky than ImmuPharma PLC. It trades about 0.08 of its potential returns per unit of risk. ImmuPharma PLC is currently generating about -0.1 per unit of risk. If you would invest  7,287  in Kinnevik Investment AB on September 12, 2024 and sell it today you would earn a total of  740.00  from holding Kinnevik Investment AB or generate 10.16% return on investment over 90 days.

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

Kinnevik Investment AB  vs.  ImmuPharma PLC

Kinnevik Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kinnevik Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ImmuPharma PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ImmuPharma PLC 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kinnevik Investment and ImmuPharma PLC

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

The idea behind Kinnevik Investment AB and ImmuPharma 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.