Correlation Between Kinnevik Investment and Neometals

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

Diversification Opportunities for Kinnevik Investment and Neometals

0.55

Correlation Coefficient

Kinnevik Investment  Neometals

Very weak diversification

The 3 months correlation between Kinnevik and Neometals is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Neometals go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Neometals

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 0.46 times more return on investment than Neometals. However, Kinnevik Investment AB is 2.16 times less risky than Neometals. It trades about -0.03 of its potential returns per unit of risk. Neometals is currently generating about -0.02 per unit of risk. 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	Weak
Accuracy	100.0%
Values	Daily Returns

Kinnevik Investment AB  vs.  Neometals

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.

Neometals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Neometals

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

The idea behind Kinnevik Investment AB and Neometals 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.